Economy

Markets

Industries

Insights

Reports

Events

Shanghai Auto agreed to buy out ventures

Updated: 2007-06-13 13:23

Shanghai Automotive Co agreed to buy out its partner in a truckmaker and an auto-parts venture for 1.48 billion yuan (US$194 million) to combine and expand its commercial-vehicle operations.

The SAIC Motor Corp. unit will take over Shanghai Huizhong Automotive Manufacturing Co. and Shanghai Wanzhong Automotive Components Co., it said in a statement to the city's stock exchange today. The automaker already owns half of both ventures.

Related readings:  Shanghai Auto expects profit surge in 1st quarter  SAIC transfers Ssangyong equity to subsidiary  Shanghai Auto posts lower net profit in 3rd quarter Find more in Markets Watch

``The company's business now becomes complete, enabling it to compete with rivals in all areas,'' said Zhang Xin, a Guotai Junan Securities Hong Kong Ltd. analyst in Beijing. ``It will be easier for Shanghai Auto to make decisions about investments and expansions after the asset buyout.''

The deal will add 30-ton trucks to product line-up of China's largest carmaker, which includes Roewe-brand sedans and vehicles made with General Motors Corp. The move is in line with a government plan to combine the country's automakers to make them more competitive with overseas rivals.

Shanghai Auto bought the stakes from Shanghai Industrial Holdings Ltd., an arm of the city's municipal government. Shanghai Industrial will book a 150 million yuan profit from the sale, it said in a Hong Kong stock exchange statement today.

Shares of Shanghai Auto rose 3.1 percent to 16.90 yuan at the 11:30 a.m. trading break in Shanghai. Shanghai Industrial shares gained 0.9 percent to HK$22.20 (US$2.85) at 11:37a.m. in Hong Kong.

Shanghai Auto, which also makes small vans through a venture with GM, wants to ``accelerate the integration'' of its commercial-vehicle units, it said today. The automaker bought US$2.4 billion of assets, including stakes in ventures with GM and Volkswagen AG, from its parent last year.

China FAW Group Corp., Shanghai Auto and other truckmakers are expanding in China as the nation's economic growth boosts commercial vehicle sales. China's overall vehicle market grew 25 percent last year to 7.22 million.