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Suzuki Wants To Buy Back Shares; No Way, Says VW

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Volkswagen said it was extremely disappointed that Suzuki Motor Corp. demanded mediation after rejecting VW's offers to rescue a floundering alliance, arguing Suzuki did not have a legal leg on which to stand.

"There is no legal foundation whatsoever obliging us to surrender our shares," it said in a statement on Friday, reaffirming its intention to hold on to a 20 per cent stake in Suzuki.

VW said Suzuki's accusations were "factually incorrect" that the German carmaker failed to offer its partner access to the technologies it wanted.

"Volkswagen categorically repudiates any allegation that we have in any way breached or failed to comply with the spirit of the cooperation agreement and rejects any termination of the agreement," it said.

Suzuki Motor Corp said on Friday it wants to buy back the 20 per cent of its shares owned by Volkswagen and is ending their two-year alliance, vowing to seek mediation if necessary, but VW said it would keep the shares.

The alliance has grown increasingly acrimonious in recent months, with Suzuki accusing the German automaker of failing to treat it as an equal partner. In September, it accused VW of breach of contract, saying its top shareholder was withholding hybrid technology.

Suzuki called on Volkswagen to release the shares to it or to a third party it specifies, adding it would seek mediation if VW did not comply. It said it would buy back the shares by November next year.

After Suzuki's statement, Volkswagen said it would hold onto the stake.

VW bought a 19.9 percent stake in Suzuki in 2009 for about 1.7 billion euros ($2.3 billion) to bolster its presence in the Indian market for small cars.

For Suzuki, the tie-up was supposed to give access to technology it could not afford to develop on its own, but the partnership has failed to deliver any meaningful cooperation.

Suzuki was holding a media briefing on the matter from 5 p.m. (0800 GMT).

(Reuters)