Guangzhou Automobile Group Co Ltd (GAC) said on Tuesday that it would increase its offer by 25.2 percent to take unit Denway Motors, a carmaking partner of Japan's Honda Motor, private.
Guangzhou Auto said in a filing to the Hong Kong stock exchange that it would lift the planned Denway Motor share swap ratio to 0.474026 per share from the previous 0.378610 to "further enhance the attractiveness of the offer," with other terms of the privatisation proposal to remain unchanged.
Guangzhou Auto, China's sixth-biggest carmaker, announced last month that it planned to issue .3 billion in new shares to privatise Denway as part of its own listing. Shareholders were to receive 0.378610 new Guangzhou Auto share for every Denway share held, implying a value of up to HK.49 (.704) per Denway share.
A local partner of Toyota and Fiat, Guangzhou Auto has a 37.9 percent stake in Denway. It also makes vehicles under its own brand.
The listing of Guangzhou Auto will offer investors a chance to tap into the rapid growth of the world's biggest auto market.
Shares of Denway have been under pressure, falling about 21 percent since the announcement of the share swap ratio on May 19, which analysts said overvalued Guangzhou Auto shares.
Denway shares closed at HKD3.54 last Friday prior to a trading suspension on Monday pending a company statement.
Trading in the shares will resume on Tuesday.
Recent strikes at auto parts makers in China have also triggered concern over wage inflation in the sector, which auto companies are unlikely to fully pass on to customers, analysts have said.
"We believe the market will apply lower valuations to (Denway) shares on account of the increased earnings risk," said Johnny Wong, an analyst at Yuanta Securities in a research report on Monday that downgraded Denway shares to sell and cut the target price by 30 percent to HKD3.00.
Templeton Asset Mangement, the largest minority shareholder in Denway, planned to support the privatisation, local media reported last month. Templeton has 15.47 percent stake in Denway -- enough to block the deal if it wishes.
"We would have liked to have seen a dividend paid out before the deal ... but we think the valuation ratios are fair and will go along with it," Templeton executive Chairman Mark Mobius was quoted as saying.
Guangzhou Auto said in a filing to the Hong Kong stock exchange that it would lift the planned Denway Motor share swap ratio to 0.474026 per share from the previous 0.378610 to "further enhance the attractiveness of the offer," with other terms of the privatisation proposal to remain unchanged.
Guangzhou Auto, China's sixth-biggest carmaker, announced last month that it planned to issue .3 billion in new shares to privatise Denway as part of its own listing. Shareholders were to receive 0.378610 new Guangzhou Auto share for every Denway share held, implying a value of up to HK.49 (.704) per Denway share.
A local partner of Toyota and Fiat, Guangzhou Auto has a 37.9 percent stake in Denway. It also makes vehicles under its own brand.
The listing of Guangzhou Auto will offer investors a chance to tap into the rapid growth of the world's biggest auto market.
Shares of Denway have been under pressure, falling about 21 percent since the announcement of the share swap ratio on May 19, which analysts said overvalued Guangzhou Auto shares.
Denway shares closed at HKD3.54 last Friday prior to a trading suspension on Monday pending a company statement.
Trading in the shares will resume on Tuesday.
Recent strikes at auto parts makers in China have also triggered concern over wage inflation in the sector, which auto companies are unlikely to fully pass on to customers, analysts have said.
"We believe the market will apply lower valuations to (Denway) shares on account of the increased earnings risk," said Johnny Wong, an analyst at Yuanta Securities in a research report on Monday that downgraded Denway shares to sell and cut the target price by 30 percent to HKD3.00.
Templeton Asset Mangement, the largest minority shareholder in Denway, planned to support the privatisation, local media reported last month. Templeton has 15.47 percent stake in Denway -- enough to block the deal if it wishes.
"We would have liked to have seen a dividend paid out before the deal ... but we think the valuation ratios are fair and will go along with it," Templeton executive Chairman Mark Mobius was quoted as saying.
