Suzuki Motor says it will buy back VW stake as court settles feud

By Minami Funakoshi and Maki Shiraki

TOKYO (Reuters) - Japan's Suzuki Motor Corp said on Sunday it will buy back the 19.9 percent stake it sold to Volkswagen AG after an international arbitration court settled a dispute between the automakers over their failed partnership.

Suzuki filed for international arbitration in November 2011, after Volkswagen (VOWG_p.DE) refused to sell back the shares in Suzuki it acquired in January 2010 for 1.7 billion euros ($1.90 billion).

The Japanese carmaker said the International Court of Arbitration of the International Chamber of Commerce partially upheld the German company's counterclaims of breach of contract and that any damages would be settled later.

Suzuki said it foresees no impact from the settlement on its full-year earnings.

"It used to feel as if a small bone were stuck in my throat... I feel so refreshed now," Suzuki Chairman and Chief Executive Osamu Suzuki said at a press conference following the company's announcement of the settlement.

In a statement, VW said "We welcome the fact that there is now clarity. The cooperation between the two companies has now been ended."

According to Suzuki's corporate website, VW held 111.61 million Suzuki shares as of March 31, valued at about 463 billion yen ($3.81 billion) based on Friday's closing price of 4,151.5 yen.

Suzuki said it expects to buy back its shares at a "reasonable" price, though it did not specify what that price would be.

The German carmaker said it has mandated an investment bank and will take legal advice on how to divest its Suzuki share.

Takaki Nakanishi, chief executive of Nakanishi Research Institute, which specialises in the automotive industry, said "It seems highly likely it will buy back at the Friday closing price."

"For Suzuki, this isn't that much money," he added. Suzuki had nearly 1 trillion yen in cash reserves as of the end of March.

The two carmakers agreed to tie up in December 2009, pledging to cooperate on technology such as hybrid and electric cars and on expanding in emerging economies.

But the union soured as Suzuki accused VW of withholding hybrid technology it promised to share. VW, in turn, objected to Suzuki's purchase of diesel engines from Fiat (FIA.MI).

($1 = 0.8946 euros)

($1 = 121.7000 yen)

(Additional reporting by Edward Taylor in Frankfurt; Writing by William Mallard and Lisa Twaronite; Editing by Richard Borsuk)