CSRC approves GAC Group's request to acquire Changfeng

Gasgoo.com (Shanghai February 1) - Guangzhou Automobile Group announced today that its application to the China Securities Regulatory Commission to acquire Hunan-based GAC Changfeng has been approved, quamnet.com reported today. With the CSRC's approval, GAC will be able to implement its plans to list A-shares for all of its properties.

According to the GAC-supplied stock conversion data, Changfeng's stock price is 14.55 yuan ($2.312), while GAC Group A-shares are valued at 9.09 yuan ($1.445) each. If these figures are correct, one share of Changfeng stock can be exchanged for 1.6 A-shares of GAC Group stock. Changfeng shareholders possess the right to trade their stocks for cash. If the trading price for GAC Group A-shares on its first listed day is less than its original issuing price, Changfeng shareholders can transfer all or some of their stock, in accordance with the issuing price, to authorized suppliers. Although the relatively high conversion ratio of Changfeng to GAC Group should prove attractive to stockholders, this provision gives them a risk-free option in case GAC Group's price suddenly falls.