Shanghai Bashi Buys $1.3 Billion of Auto-Parts Assets
2008-06-24 Source：english.chinabuses.com
Summarize：Shanghai Bashi Industrial (Group) Co., the city-controlled bus company, will buy 8.8 billion yuan ($1.3 billion) of car-parts making businesses from the parent of China's largest automaker as the cit ...
Shanghai Bashi Industrial (Group) Co., the city-controlled bus company, will buy 8.8 billion yuan ($1.3 billion) of car-parts making businesses from the parent of China's largest automaker as the city reorganizes its assets.
The company will issue 1.15 billion new shares at 7.67 yuan apiece to Shanghai Automotive Industry Corp. in payment, it said in a Shanghai Stock Exchange statement today. Shanghai Bashi, which will become a Shanghai Auto unit, fell by the 10 percent limit as it resumed trading for the first time since May 15.
Shanghai Bashi will buy stakes in 31 parts-makers through the deal, enabling it to benefit from China's surging car sales, which have doubled in five years. The deal, and Shanghai Auto's 2006 sale of automaking assets to SAIC Motor Corp., are a part of a wider transfer of businesses from state-controlled companies to listed units, designed to help improve efficiency and financial transparency.
"The reorganization helps Shanghai Bashi gain a source of profit growth in the future rather than relying on government subsidies as they did in the past," Zheng Jun, an analyst with China Securities Co. in Beijing, said by phone today. Still, "the injection of assets with strong profitability is less than the market's expectation."
Parts Profits
The parts-making businesses may generate about 960 million yuan of profit this year, according to the statement. Shanghai Bashi, the city's largest bus company, plans to exit the public transportation business as part of the reshuffle.
Shanghai Bashi will sell shares to Shanghai Auto at a 10 percent discount to its 8.50 yuan closing price on May 15. The company fell to 7.65 yuan at the close of trading in Shanghai today. The CSI 300, China's benchmark stock index, plunged 28 percent in the period that Shanghai Bashi was suspended.
Shanghai Auto will own 60 percent of Shanghai Bashi following the deal, according to the statement. The company sold 19.1 billion yuan of automaking assets, including stakes in ventures with Volkswagen AG and General Motors Corp., to SAIC Motor in December 2006.
China's government is reorganizing state-owned companies to help enhance their competitiveness. Hebei province formed a company earlier this month that will overtake Baosteel Group Corp. as the nation's biggest steelmaker by combining Tangshan Iron & Steel Group and Handan Iron & Steel Group.
Views:0Editor：
Related China Bus News
