Shanghai Automotive Industry Corp (SAIC), one of China's biggest sedan makers, will sign the final agreement on a planned merger with Yuejin Motor Group, controlling shareholder of Nanjing Automobile (Group) Corp, on December 26 this year, the Beijing Times reported today.
The two companies are planning a share swap, with Nanjing Auto's complete vehicle assets to be injected into SAIC's listed subsidiary - SAIC Motor Corp, and its auto parts and trade businesses to be injected into SAIC. Nanjing Auto will hold SAIC Motor Corp's stake, according to the report.
After completion of the merger, the SAIC-Nanjing Auto complex will be the nation's biggest auto group in terms of assets, number of products, and business scope.
The two parties signed a letter of intent in July this year for the much-heralded association, according to an earlier China Daily report.
They formed a working group to discuss "possibilities and programs for all-round collaboration" in vehicles, spare parts, auto trading, and services.
SAIC, the partner of General Motors and Volkswagen, in 2004 bought the intellectual rights to the Rover 75 and 25 sedans, and K-series engines from MG Rover.
Nanjing Auto, which runs a car venture with Fiat, in 2006 purchased the MG brand, a plant in England, and Powertrain, the engine arm of the British carmaker.
SAIC, one of the top Fortune 500 multinationals for the past three years, is the most profitable carmaker in China. But Nanjing Auto has been in the red for years.
Sales of passenger cars made in China soared 22.83 percent annually to 5.66 million units in the first 11 months of 2007, the China Association of Automobile Manufacturers said.
Vehicles sales in China are forecast to total 8.5 million units this year, up from 7.22 million in 2006.
(Chinadaily.com.cn December 24, 2007)