SAIC gets ready to expand

By Miranda Shek in Shanghai

Shares of SAIC Motor Corp, the country's largest automaker by sales, climbed 0.1 percent to 18.48 yuan ($2.82) Wednesday, after the company announced its plan to acquire assets worth 28.6 billion yuan ($4.37 billion) from its parent company in order to boost competitiveness.

Trading in the automaker's shares resumed Wednesday after a seven-week suspension, according to the Shanghai Stock Exchange. The trade volume surged to a three-month high by the end of the day, indicating shareholders' confidence in the deal, an independent stock analyst surnamed Wu told the Global Times.

SAIC Motor, Chinese partners of General Motors Co and Volkswagen AG, announced in a statement that it will finance the deal by selling 1.73 billion shares at 16.53 yuan ($2.53) to its parent, Shanghai Automotive Industry Corp, in return for the assets.

The assets involved include a 60.1 percent stake in auto parts maker Huayu Automotive Systems Co, SAIC's units in the US and Hong Kong, and its 6.01 percent stake in GM Korea.

Shares of Huayu Automotive Systems Co Wednesday dropped 4.29 percent and closed at 12.26 yuan ($1.87). SAIC Motor will take over its parent company's interest in the listed company under the proposal.

The State-owned Assets Supervision and Administration Commission has urged State-owned companies to list their entire business to increase transparency and improve corporate governance.

SAIC Motor said in the statement that the proposed restructuring plan is intended as a pilot for the asset regulator's proposal. Shanghai Automotive Industry's ownership in SAIC Motor will rise from 72.95 percent to 77.21 percent after the deal.

"The deal will accelerate the production line to further acquire experience, technology and financial strength, especially in making new-energy vehicles under its own brand name," the company said in its statement.

The company plans to roll out its pure-electric car by late 2012, as announced by SAIC Motor President Chen Hong in early March. The specifics of the new car are similar to SAIC's electric concept vehicle, the E1, introduced at the Beijing auto show last year.

SAIC reported record sales in 2010, with 3.58 million vehicles sold, up 31 percent year on year. Its fourth-quarter earnings rose 58.4 percent, fueled by the central government incentives in promoting green mobility.