BEIJING, Sept 14 (Reuters) – Guangzhou Automobile Group signed a letter of intent with FAW Group, another Chinese automaker, it said on Monday, to acquire part of FAW’s stake in a vehicle-manufacturing joint venture through a share issuance and proposed capital raise.
If completed, FAW is expected to become GAC’s second-largest shareholder with strategic influence, GAC said in a Shanghai Stock Exchange filing.
GAC’s Shanghai-listed A-shares have been suspended since September 14 and the suspension is expected to last no more than 10 trading days, it said.
The target joint venture’s name is temporarily withheld because it involves an overseas-listed company, GAC said, adding that no definitive transaction agreement has been signed, and the deal is subject to internal and regulatory approvals.
State-owned Economic Daily reported the undisclosed JV was FAW Toyota, citing sources.
Toyota did not immediately respond to a Reuters request for comment.
Both FAW and GAC are partners of Japan’s Toyota Motor Corp in China, operating as FAW Toyota and GAC Toyota, respectively.
The deal would mean the consolidation of the two Toyota joint ventures has entered a substantive phase, Economic Daily said. Under the proposed structure — strongly advocated by Toyota’s Japanese side — Toyota would hold 50% in a merged Toyota sales company in China, with FAW and GAC holding 25% stakes each, the state-owned outlet said citing sources.
Dealer networks would be fully integrated under the new company, allowing it to sell and service all Toyota models in China, it added.
(Reporting by Xiuhao Chen, Yukun Zhang, Zhang Yan and Ju-min ParkEditing by Tomasz Janowski and Barbara Lewis)
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