Lifan Auto denies 'hostile takeover' of Holland Car

Shanghai, August 25 (Gasgoo.com) Last week gasgoo.com reported that Chinese automaker Chongqing Lifan Automobile may be sued by its Ethiopian partner, Holland Car Plc over Lifan's contract termination. Yesterday, in a statement to gasgoo.com, Lifan Auto clarified the dispute and denied the "hostile takeover bid" allegation of Holland Car.

Tadesse Tessema, General Manager of Holland Car Plc, said that Lifan has demanded to take over Holland Car and threatened to terminate the auto-parts supply contract. Arguing that the hostile takeover bid is against Ethiopian law, Tessema added that Lifan "has been acting in a way that has hurt Holland Car's reputation. We are now planning to take the case to a court of law."

Lifan Auto dismissed Tessema's allegations as completely baseless, and clarified that the direct reason for terminating the contract in June is that Holland Car has failed to reach the sales target set by both sides. In 2008, the Ethiopian partner only achieved half of the orders it had promised even after it had borrowed US$100,000 from Lifan, the Chinese company said.

As to the takeover bid allegation, Lifan said that it has never demanded to acquire Holland Car. The fact is that in 2008 financially-troubled Holland Car invited Lifan Auto to form a joint venture, but Lifan disagreed after some assessment, Lifan said, adding that this issue has nothing to do with ending the contract of supplying auto parts to Holland Car (although its term was in 2010).

Holland Car Plc, the first automobile assembly company in Ethiopia, is a joint venture (JV) between Trento, a Dutch assembly tool manufacturer, and Ethio-Holland Transport, an importer of used cars. After ending its cooperation with Lifan, Holland Car has reportedly signed an auto-parts supply deal with another Chinese carmaker Jianghuai Auto Co. (JAC).