SAIC acquires parent company’s 6% stake in GM’s South Korean unit
By Andrew, 06 Apr, 2011. 0 Comments
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SAIC Motor Corp. has recently announced several acquisitions, including buying its parent firm’s 6% stake in the South Korean unit of GM. Shanghai-based SAIC, China's largest automaker, said that it will issue 1.73 billion new shares to pay for this purchase. SAIC Motor also entered a deal to buy parts makers and other businesses from its parent for 32 billion yuan ($4.9 billion) in stock in order to have control of the upcoming models’ supplies and speed development.
SAIC, which builds cars in China with General Motors Co., said that this acquisition may assist with its projects involving electric and hybrid vehicles. This acquisition is timely since the government is strongly supportive of cars that offer high economy in order to reduce pollution as well as lessen the need to import fuel to China. To boost financial transparency, China's state-controlled companies have been urged to sell assets to listed units. Han Weiqi, an analyst at CSC International Holdings Ltd. in Shanghai, said that by taking a stake, SAIC will get the chance to work directly with parts suppliers.
Weiqi also believes that SAIC made this deal to respond to government’s thrust for reorganization in the auto industry. As a result of the deal, SAIC will now hold the 60% stake that its parent Shanghai Automotive Industry Corp. has in Shanghai-listed parts maker Huayu Automotive Systems Co. SAIC will also now own export and logistics companies as well as businesses that are developing alternative-energy vehicles.
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