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Regulators gave the final nod to a share transfer deal between a state-owned automotive parts producer and a privately-owned investment firm Thursday.
The State-owned Assets Supervision and Administration Commission approved the sale of 41.913308 million shares in the Shenzhen-listed arm of Xiangyang Automobile Bearing Corp in central China's Hubei Province to Greencool, an investment firm based in eastern Jiangsu Province.
Greencool will be the biggest shareholder of Xiangyang Automobile Bearing Co Ltd as a result of the deal, controlling a 29.84 percent stake.
Xiangyang Automobile Bearing Corp will continue to hold 5 million shares, or 3.56 percent, in the listed arm. The price per share of the deal has not been revealed.
The listed arm, which has a registered capital of 140.4 million yuan (US$16.96 million), said in a statement that the price "should not be less than its net asset per share."
Xiangyang Automobile Bearing Corp and Greencool signed the share transfer agreement in April.
The deal is seen as another important move by Greencool to penetrate China's booming auto industry.
Greencool acquired a 60.67 percent stake last December in Yaxing, a troubled state-owned bus maker in Jiangsu which runs a joint venture with Mercedes-Benz, which belongs to the German-US giant DaimlerChrysler.
Greencool is one of the lucky Chinese non-auto investors which has squeezed into the auto industry through mergers and acquisitions as the Chinese Government has increased barriers on them coming into the sector.
Automakers in China which "could not maintain normal operations" are forbidden to transfer their production permits to non-auto and motorcycle enterprises and individuals, according to the nation's new auto policy launched in June.
Other lucky bargees most recently include AUX and Bird, the two privately-owned home appliance and phone producers in east China's Zhejiang Province.
AUX and Bird merged two state-owned car plants in Liaoning and Jiangsu provinces respectively earlier this year.
China's auto industry is still very lucrative as car demand in China is growing rapidly and domestic car prices are higher than in developed markets.
Sales of the domestically-made passenger cars are forecast to grow by 30 percent to 2.6 million units this year.
All of world's and domestic major automakers are speeding up investment to build new production capacity in China.
This is despite warnings of overheating and a recent slump in local car sales.
Xiangyang Automobile Bearing Co Ltd ended at 3.88 yuan (47 US cents) per share yesterday, up 4 percent.
At the same time, Greencool is also consolidating its dominance of China's refrigerator sector through mergers and acquisitions.
Greencool is considering an acquisition plan for Bingxiong, a Shanghai-listed fresh-preservation equipment maker which has heavy debt, said sources familiar with the matter.
(China Daily August 6, 2004)
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