At the board meeting held on 18 November 2011, Suzuki Motor Corporation (“Suzuki”) resolved to terminate the Framework Agreement between Suzuki and Volkswagen AG regarding the business alliance and cross-holding of shares, and to decide on matters regarding the repurchase of treasury shares, in accordance with Article 156, which is applied based on a reading of Article 165, Paragraph 3 of the Companies Act, in preparation for the repurchase of shares in relation to the termination of the Framework Agreement.
The details are as follows.
Today Suzuki has terminated the Framework Agreement in accordance with the terms of that agreement and has notified Volkswagen AG of such 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 entered into the Framework Agreement in December 2009, recognizing 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 shareholding of 19.89% of Suzuki shares was required by Volkswagen AG to enable this access. Despite this, Volkswagen AG did not allow Suzuki access to Volkswagen AG’s core technology and it also became clear that there were differences between Suzuki and Volkswagen in the understanding of “independence.” Suzuki cannot therefore establish a relationship of mutual trust which is the basis for collaboration between the two parties.
Suzuki, therefore, served Volkswagen AG with a “Notice of Breach” on 14 October 2011, and therein notified Volkswagen AG of a certain period of time for Volkswagen AG to take remedial action in accordance with the agreement. However, Volkswagen AG has not taken any remedial action. To date, Suzuki has repeatedly made requests to Volkswagen AG to agree to have amicable discussions to terminate the business and capital relationship, but unfortunately Volkswagen AG has not agreed to such requests.
As a result of the termination, the cross- shareholding alliance must be dissolved immediately and in so doing the parties will return to their independent status before the agreement. Volkswagen AG cannot increase or decrease its proportion of Suzuki shares without Suzuki’s consent even after the termination of the Framework Agreement.
Unless Volkswagen AG effectuates the disposition of Suzuki shares to Suzuki or its designated third party immediately, Suzuki will begin arbitration, in order to re-establish the genuine independence of Suzuki by compelling the disposition of Suzuki shares to Suzuki or its designated third party.
※Please refer to the document entitled “Transfer of Treasury Shares by Third-party Allotment; Business Alliance and Cross-holding of shares with Volkswagen Aktiengesellschaft; and Changes to the Major Shareholders and the Largest Shareholder” dated 9 December 2009 for details of the capital and business alliance with Volkswagen AG.
Suzuki will repurchase its treasury shares in the case where Suzuki instructs Volkswagen AG to sell the Suzuki shares it holds to Suzuki and Suzuki purchases such shares in relation to the termination of the Framework Agreement.
|(1) Type of shares||Suzuki common shares|
|(2) Total number of shares that can be repurchased||112,210,000 shares (maximum limit. Percentage to total number of issued shares (excluding treasury stock): 20.00 %)|
|(3) Total amount of the repurchase price||The amount obtained by multiplying the total number of acquirable shares by the closing price at the Tokyo Stock Exchange on the business day immediate preceding the day on which the shares are to be repurchased|
|(4) Repurchase period||November 21 2011～November 16 2012|
|(5) Repurchase method||Commission of buy-in at the ToSTNET-3 at the Tokyo Stock Exchange|
|Total number of shares issued and outstanding (excluding treasury shares)||561,029,211 shares|
|Number of treasury shares||18,093 shares|
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