Guangzhou Auto buys 29% of Changfeng Motor

Shanghai, May 21 (Gasgoo.com) China's Guangzhou Automobile has signed an agreement on Thursday afternoon to take a 29 percent stake in Hunan Changfeng Motor Co, which makes Guangzhou Auto the largest shareholder of the sport utility vehicle (SUV) specialist, according to sina.com.

Under the agreement, Hunan Changfeng Motor Co's company name will be changed to Guangqi Changfeng Holding Co. Ltd. Changfeng will hold 21.98 percent stake in the new company, while Mitsubishi Motors will remain Guangqi Changfeng's third largest shareholder with a 14.6 percent stake.

Guangzhou Auto also plans to invest 10 billion yuan ($1.47 bln) in Changfeng over the next five years to increase its annual production capacity to 500,000 vehicles, with sales revenue to hit 40 billion yuan, according to the company's Chinese press release.

No financial details were released immediately, but a Reuters report said that based on Changfeng's current market capitalization of about $846 million, a 29 percent stake is worth around $245 million.

Guangzhou Automobile and Chengfeng Auto held a signing ceremony on reorganization in
Changsha, Hunan on Thursday afternoon.