Yesterday, Qinghong ZENG, general manager of Guangzhou Automobile Group Co., Ltd. (601238.SH, hereinafter "GAC"), made a speech at Global Auto Forum that GAC has to delayed its IPO because of Changhe Auto shares takeover. But he still believes that mergers and acquisitions is the tendency in the future. Just like developed auto market such as Japan and USA, China auto will build its inner growth power by auto industry mergers and acquisitions.
Zhiyong ZHANG, an auto industry analyst believes that mergers and acquisitions is not just a simple merge of companies, and shall not decide by government. An easy decision may cause a failure in the future.
In March 2009, government has published
In 21 May 2009, GAC announced that it brought up 29% shares of Changfeng Auto with 1 billion Yuan, which makes GAC as the biggest shareholder of Changfeng. Then Changfeng changed its name to “GAC Changfeng”. Fangyou ZHANG, president and general manager of GAC takes president of GAC Changfeng by himself. According to memo between GAC and Changfeng, both sides will invest 10 billion Yuan into Hu Nan to build 500 thousand production capacities annually.
Vista looks prefect, but the merger has delayed GAC IPO accidently. Qinghong ZENG said that GAC consulted with government officer about the influence of merger between two companies. The answer was it would not influence GAC IPO. However, after merger, GAC IPO has been stopped because of not enough shares taking and peers competition. Qinghong ZENG felt pity at that moment.
“We considered about buying more shares. But according to policy, more than 30% shares buying will cause widely buying from all shareholders, which cost too much.”
In 2011, GAC has initiated the second round Changfeng reorganization, which has launched shares exchange plan. It plans to exchange every Changfeng share with 1.6 GAC A shares. Then GAC Changfeng exits stock market, and GAC launch Shanghai Stock Exchange. GAC final come back to A share, and becomes the first auto company launches A H overall.
