People's Daily
A new Chinese automotive champion will be born through a much-heralded cross-holding deal inked yesterday in Beijing between two rival carmakers. Under the agreement, Shanghai Automotive Industry Corp (SAIC)'s publicly traded arm, SAIC Motor Co Ltd, will buy Nanjing Automobile Corp's entire vehicle and core component manufacturing assets for almost 2.1 billion yuan. Nanjing Automobile will also inject all other component, services and trade assets into Donghua Company, its existing joint venture with parent SAIC. In return, Nanjing Automobile will hold 320 million shares of SAIC Motor, the listed firm, and a 25 percent stake in Donghua.
Trade of SAIC Motor's shares was suspended yesterday due to the deal. It closed at 27.01 yuan per share on Tuesday. "The move is a landmark in China's fragmented auto industry. It's a win-win deal for both sides," said Yale Zhang, director of Greater China Vehicle Forecasts for US auto consultancy CSM Worldwide Corp.