Guangzhou Automobile Group Co. moved closer to a listing in Hong Kong when shareholders of its Hong Kong unit Denway Motors Ltd. approved a buyout offer from the Chinese automaker.
A "big proportion" of investors voted in favor of the buyout plan, Denway Chairman Zhang Fangyou said after a shareholders' meeting in Hong Kong today. Denway investors will receive shares in Guangzhou Auto under the deal.
Guangzhou Auto, a partner of Toyota Motor Corp. and Honda Motor Co. in China, has applied to begin trading its shares on the Hong Kong stock exchange's main board on August 30. The deal offers access to Denway's factories in southern China and opens more fund-raising channels to help Guangzhou Auto compete with SAIC Motor Corp. and Dongfeng Motor Group Co. in the world's largest auto market.
"By becoming a publicly traded company, Guangzhou Auto will be freed up to raise more funds," said Zhang Jing, an analyst at Phillip Securities (HK) Ltd. in Shanghai. "The deal is good for Denway shareholders too, because Guangzhou Auto has greater business scope and is more competitive."
The Guangzhou, south China-based company said on June 8 it would raise a bid for the 62 percent of shares in Denway that it doesn't already own. It will exchange about 0.47 share for each share in Denway, up from 0.38 it offered in May, Guangzhou Auto said. The unlisted carmaker said May 19 its shares are worth as much as HK$14.49 apiece.
Denway rose 0.3 percent to HK$3.78 yesterday before trading in the shares was suspended pending the shareholder vote. The stock, which has declined 23 percent this year, has climbed 6.8 percent since the June 8 announcement of the improved offer.
Li Nian Brand
Denway holds 50 percent of Guangqi Honda Automobile Co., a venture with Honda Motor that is adding production of the Accord Crosstour wagon this year. The venture has announced plans to introduce the Everus sedan, the first car made under its new Li Nian brand, in 2011.
Buying Denway would create a company with a combined value of as much as $10.6 billion, based on estimates last month by Anglo Chinese Corporate Finance Ltd., an adviser on the deal. Shanghai-listed SAIC Motor's market capitalization is 118 billion yuan (USD17.4 billion).
Guangzhou Auto may record a profit of 3.76 billion yuan this year, without taking into account the offer for Denway shares, the company said on May 19. Guangzhou Auto's net income was 2 billion yuan last year.
The automaker aims to boost annual production capacity to more than a million vehicles by the end of this year, from 606,600 in 2009.
Guangzhou Auto also makes Camry sedans and Highlander sport-utility vehicles in a partnership with Toyota Motor Corp., the world's largest automaker, in Guangzhou.
A "big proportion" of investors voted in favor of the buyout plan, Denway Chairman Zhang Fangyou said after a shareholders' meeting in Hong Kong today. Denway investors will receive shares in Guangzhou Auto under the deal.
Guangzhou Auto, a partner of Toyota Motor Corp. and Honda Motor Co. in China, has applied to begin trading its shares on the Hong Kong stock exchange's main board on August 30. The deal offers access to Denway's factories in southern China and opens more fund-raising channels to help Guangzhou Auto compete with SAIC Motor Corp. and Dongfeng Motor Group Co. in the world's largest auto market.
"By becoming a publicly traded company, Guangzhou Auto will be freed up to raise more funds," said Zhang Jing, an analyst at Phillip Securities (HK) Ltd. in Shanghai. "The deal is good for Denway shareholders too, because Guangzhou Auto has greater business scope and is more competitive."
The Guangzhou, south China-based company said on June 8 it would raise a bid for the 62 percent of shares in Denway that it doesn't already own. It will exchange about 0.47 share for each share in Denway, up from 0.38 it offered in May, Guangzhou Auto said. The unlisted carmaker said May 19 its shares are worth as much as HK$14.49 apiece.
Denway rose 0.3 percent to HK$3.78 yesterday before trading in the shares was suspended pending the shareholder vote. The stock, which has declined 23 percent this year, has climbed 6.8 percent since the June 8 announcement of the improved offer.
Li Nian Brand
Denway holds 50 percent of Guangqi Honda Automobile Co., a venture with Honda Motor that is adding production of the Accord Crosstour wagon this year. The venture has announced plans to introduce the Everus sedan, the first car made under its new Li Nian brand, in 2011.
Buying Denway would create a company with a combined value of as much as $10.6 billion, based on estimates last month by Anglo Chinese Corporate Finance Ltd., an adviser on the deal. Shanghai-listed SAIC Motor's market capitalization is 118 billion yuan (USD17.4 billion).
Guangzhou Auto may record a profit of 3.76 billion yuan this year, without taking into account the offer for Denway shares, the company said on May 19. Guangzhou Auto's net income was 2 billion yuan last year.
The automaker aims to boost annual production capacity to more than a million vehicles by the end of this year, from 606,600 in 2009.
Guangzhou Auto also makes Camry sedans and Highlander sport-utility vehicles in a partnership with Toyota Motor Corp., the world's largest automaker, in Guangzhou.
Source: Bloomberg
