Gasgoo Munich- GAC Group announced on the evening of September 14 that it had signed a letter of intent with China FAW Corporation Limited earlier that day regarding a potential major asset restructuring. GAC plans to issue shares to acquire part of FAW's stake in an unnamed vehicle manufacturing joint venture while raising supporting funds.
Image source: GAC Group
Preliminary estimates indicate that FAW would become GAC Group's second-largest shareholder and hold strategic influence following the transaction. GAC said the deal is expected to constitute both a major asset restructuring and a connected transaction, but would neither change its ultimate controlling party nor amount to a backdoor listing.
GAC Group's A shares were suspended from trading from the market opening on September 14, with the suspension expected to last no more than 10 trading days. Trading in its Hong Kong-listed shares was also halted. Because the target asset involves an overseas-listed company, GAC has temporarily withheld its identity and plans to disclose further details in the restructuring proposal.
GAC stressed that the agreement is preliminary and that no definitive transaction documents have been signed. The proposed deal remains subject to internal decision-making procedures and regulatory approvals, leaving significant uncertainty over whether it will ultimately proceed.
During the trading suspension, GAC Group will proceed with the necessary work involving professional advisers. The company plans to apply for trading to resume after its board reviews the restructuring proposal and will continue disclosing material developments. It also cautioned investors about the associated risks.
The proposed transaction is the latest indication of potential resource consolidation between centrally and locally administered state-owned automotive groups in China. Market speculation had previously suggested a possible cross-shareholding partnership between FAW and GAC. Against a policy backdrop encouraging automotive mergers and restructuring during China's 15th Five-Year Plan period, the letter of intent has drawn industry attention to further consolidation among state-owned automakers.
