SAIC and Yuejin Auto merger creates Chinese car colossus 20:20, December 26, 2007
China's largest automaker, Shanghai Automotive Industry Corp. (SAIC), and Jiangsu Yuejin Automotive Group, the parent company of Nanjing Automobile Corp. (NAC), finalized a long- planned merger contract on Wednesday.
The two signed a letter of intent on cooperation at the end of July.
Under the contract, Shanghai Automotive Co. Ltd., a subsidiary of SAIC, will earmark 2.095 billion yuan (285.82 million U.S. dollars) to purchase auto manufacturing and parts assets from NAC. In return, Yuejin group will hold 320 million shares in Shanghai Automotive Co.
Other vehicle-related assets of NAC will be merged into a joint venture named Donghua Corp. set up by SAIC and Yuejin Group, which will hold 75 percent and 25 percent stakes, respectively.
Chinese Vice Premier Zeng Peiyan attended the signing ceremony and urged domestic vehicle makers to step up collaboration and innovation.
"This full-scale cooperation between SAIC and NAC is a milestone in China's auto industry development and pushes forward the merger and acquisition pace of this industry," said Zhang Baoguo, vice minister in charge of the National Development and Reform Commission.
SAIC, a partner of Volkswagen AG and General Motors, was first in the domestic market last year, with sales of 1.34 million vehicles, including 915,000 passenger cars and 429,000 commercial vehicles.
"This partnership is in line with the country's industrial policy for the auto sector and conducive to enhancing resources utilization and efficiency and building big domestic auto brands," Hu Maoyuan, Chairman of SAIC, told Xinhua.
The country has encouraged restructuring and consolidation in the auto industry to build a few world-scale giants.
Industry watchers predicted that with this merger, the combined entity would become the colossus of China's car industry in sales and production, with annual sales quickly surpassing 2 million units.
Shares of Shanghai Automotive Co. ended trading on Tuesday and it closed at 27.01 yuan on Monday.
"Source:Xinhua"