Suzuki Motor Corporation has today, in accordance with the terms set out, terminated the Framework Agreement and has notified Volkswagen AG of said termination. Suzuki has also notified Volkswagen AG of Suzuki’s demand that Volkswagen AG transfer its Suzuki shares to Suzuki or its designated third party.
Suzuki and Volkswagen AG together entered into the December 2009 Framework Agreement. This agreement stated that they would: recognise each other as independent equal partners and, in so doing agreed to facilitate, among other things, access to Volkswagen AG’s technology. Volkswagen AG’s 19.89% Suzuki shareholding was required to enable this access.
Despite this agreement, Volkswagen AG did not allow Suzuki access to core technologies and it also became clear that there were differences between both parties understanding of the term “independence.” Suzuki felt that they could not, therefore, continue a relationship based on mutual trust which was the basis upon which the original collaboration was built.
Suzuki served Volkswagen AG a “Notice of Breach” on 14 October 2011, notifying Volkswagen AG of a certain period of time in which they could take remedial action in accordance with the agreement. This is something they have not done. Suzuki has repeatedly requested amicable discussions in which to terminate business and capital relationships, but unfortunately Volkswagen AG failed to acquiesce to such requests.
The termination must see the immediate dissolving of the cross- shareholding alliance, returning each party to its original, independent status. Volkswagen AG cannot increase or decrease its proportion of Suzuki shares without the consent of Suzuki- even after the termination of the Framework Agreement. Unless Volkswagen AG moves Suzuki shares to Suzuki or its designated third party with immediate effect, Suzuki will begin arbitration by actively compelling the disposition of Suzuki shares to Suzuki or its designated third party in order to re-establish the genuine independence of the company.
Prof. Dr. Ferdinand K. Piëch, Chairman of the Supervisory Board of Volkswagen AG, Prof. Dr. Martin Winterkorn, Chairman of the Board of Management of Volkswagen AG, and Mr. Osamu Suzuki, Chairman and CEO of Suzuki, have engaged directly regarding the issues that have arisen since the formation of the alliance. The problems that both companies have recently encountered were clarified and therefore Suzuki believes that their explanation will be required in the arbitration proceedings.
Suzuki’s Chairman and CEO Osamu Suzuki said of the proceedings: “Today Suzuki terminated the partnership with VW. Suzuki will be seeking the return of its shares from VW in arbitration. I am disappointed that we have to take this action but VW’s actions have left us no choice. They have continued to refuse our attempts on numerous occasions to resolve these issues through negotiation. I am more disappointed that having shaken the hand of Dr. Winterkorn in agreeing to this partnership, he has not honoured his commitment to grant Suzuki access to what was originally agreed. In the absence of VW’s cooperation and given its failure to do what was agreed, there is no basis for the partnership to continue. With the cessation of the partnership there is also no basis for VW to hold on to Suzuki’s shares. We will now work to restore the relationship between Suzuki and VW to its original state as independent parties who do not restrict each other’s business. I call on Dr. Winterkorn to honour this”