(Yicai Global) Jan. 2 -- Guangzhou Automobile Group Co. [SHA:601238; HKG:2238], a state-owned automaker in China, is considering acquiring all shares of Honda Automobile (China) Co. through GAC Honda, the joint venture it set up with Honda Motor Co. [TYO:7267; NYSE:HMC]. The move is aimed at improving the company's capacity in an increasingly competitive automotive market in China.
A shareholder of Honda China, Dongfeng Motor Corporation [HK:0489], is selling 10 percent equity it holds for CNY94.87 million (USD14.6 million), shows information released by Shanghai United Assets and Equity Exchange yesterday. Previously, GAC announced to transfer all its 25 percent of shares of Honda China to GAC Honda for CNY232 million.
GAC Honda will gradually acquire all shares of Honda China by means of transfer in the stock market and negotiated transfer, and upgrade the company, GAC said, adding the total investment for the project is estimated to exceed CNY1.2 billion, according to the Beijing News today.
Founded in 2003, Honda China is the first manufacturer of finished automobiles among its Chinese peers. It exports all autos it makes. It is jointly controlled by Honda, GAC and Dongfeng Motor, which respectively hold 65 percent, 25 percent and 10 percent of shares.
GAC Honda has an annual output capacity of 720,000 vehicles. As China's auto market expands rapidly, the company plans to acquire Honda China to improve its capacity to keep up with the growing market demand, commented Cui Dongshu, secretary general of China passenger car association.