More on the Guangzhou-Changfeng merger

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The Guangzhou-Changfeng merger was sealed today by both company chairmen.

The deal will see:

• Guangzhou Auto will become the largest stake holder in Changfeng
• Changfeng Auto parent co will own 21.98%
• Changfeng Auto will change its name to Guangzhou-Changfeng Auto
• Will produce 500,000 cars per year.
• Guangzhou Auto will invest 10 billion RMB in Hunan
• First car to launch in August 2010.

The take over is the first of this year, and is certainly not expected to be the last.

Bloomberg with more info:

Guangzhou Auto will buy 151 million shares from Changfeng Motors Group Co., parent of Changfeng Motors, according to a statement today on Guangzhou Auto’s Web site. Guangzhou Auto will become the biggest shareholder of Changfeng Motor with Changfeng Motor Group holding 22 percent. The statement did not give any financial details.

The deal will add sport-utility vehicles to Guangzhou Auto’s product lineup, which already includes cars made through ventures with Toyota Motor Corp. and Honda Motor Co. The move is also in line with China’s push to combine some of the nation’s roughly 130 automakers to help build stronger companies that can compete globally.

“The deal is beneficial to both parties as Changfeng lacks capital and Guangzhou Auto is short of SUVs,” said Zhu Xuedong, an Industrial Securities Co. analyst in Shanghai. “The general trend will be to see more such consolidation in the coming months.”

Guangzhou Auto and Changfeng Motor will invest about 10 billion yuan ($1.47 billion) in Hunan over the next five years to build up half a million units of production capacity and aim to have sales of more than 40 billion yuan and total profit of 5 billion yuan before tax, according to the statement.

Shanghai-listed Changfeng Motors, part-owned by Japan’s Mitsubishi Motors Corp., is controlled by neighboring Hunan province.