(Yicai Global) July 8 -- Shares of Guoxuan High-Tech rallied momentarily after it said that China's antitrust regulator has nothing against a unit of Volkswagen buying a controlling stake in China's third-biggest new energy vehicle battery maker.
Guoxuan's stock price [SHE: 002074] jumped 4.85 percent yesterday to CNY30.5 (USD4.30) and was 0.2 percent up at 11.47 a.m today.
The State Administration for Market Regulation has told Guoxuan that it will not need to review the intended purchase any further, the Hefei-based target company said in a statement yesterday.
Volkswagen China Investment will pay about EUR1.1 billion (USD1.2 billion) to buy a 26 percent stake in the battery maker, Guoxuan said on May 28. The Wolfsburg-headquartered carmaker will acquire some of the target firm's new equity via private placement and purchase 56.5 million shares from Chairman Zhen Li.
Volkswagen will pay not less than CNY6 billion (USD855 million) for some of the newly issued equity that is worth in total not more than CNY7.3 billion. The proceeds will be used for two projects: one to make 16 gigawatt-hours worth of lithium-ion batteries per year, as well as another one to produce 30,000 tons of high-nickel ternary cathode materials each year. The remainder will supplement the firm's working capital.
The deal still requires approvals by the commerce ministry, securities regulator, and the Shenzhen Stock Exchange.
Editor: Emmi Laine