Guangzhou Auto plans to merger with GAC Changfeng Motor

Guangzhou Automobile Group Co Ltd said it plans to merger with GAC Changfeng Motor Co Ltd. through a 5.23 billion yuan ($766 million) share swap, the 21cbh reported Wednesday.

Guangzhou Auto announced recently that its net profit reached 4.295 billion yuan ($ 655 million) in 2010, up 111.39 percent year-on-year.

Mitsubishi Motors Corp, the company's Japanese partner, had decided to accept the cash offer and will receive a total of 961.4 million yuan for its 14.59 interest in Shanghai-listed Changfeng.

Guangzhou Auto will issue no more than 470.11 million new A shares at 9.09 yuan each, representing 7.1 percent of the enlarged company's issued share capital, to implement the proposed merger.

The merger and A-share listing were subject to regulatory and shareholder's approval.

In November, Guangzhou Auto and Mitsubishi signed a memorandum of understanding with an intention to convert GAC Changfeng, which makes vehicles with Mitsubishi and other brand names and provides automobile components, into a 50/50 joint venture and to delist Changfeng.

The joint venture will introduce new models and technology and enhance the competitiveness of Guangzhou Auto in the domestic market, in particular the sport utility vehicle (SUV) sector, Guangzhou said.