Daimler-Chrysler joins hands with Foton

Daimler-Chrysler (DC) plans to invest 820 million yuan to take up 297 million newly issued shares of Foton, accounting for 24% of Foton total shares. 

The delegation headed by Mr. Renschler, the member of DC board and chief executive of commercial vehicle department and Mr. Walker who is in charge of the business of northeast Asia visited Foton to sign the Agreement of Issuing Target Shares and Purchasement and the Alliance Deal. The issue of target share was approved by the board of company and temporary shareholders assembly.

It is a marathon negotiation. As early as Sep 2003, Foton and DC signed a 20-year-long cooperation agreement involving 1.21 billion dollars, which included strategic cooperation in commercial vehicle, taking up Foton's corporate shares, jointly establishing medium-duty and heavy-duty truck joint venture and the possibility of cooperation in large- and medium-size bus fields.

According to the Alliance Deal, DC holding certain portion of Foton's shares will carry out the cooperation in commercial vehicle field with Foton. The programs of medium -duty and heavy-duty trucks are certainly to boost the competitiveness of Foton and export opportunity. Foton also can use the technologies of DC and sales net across country by Light-duty truck program. And in the future Foton may be the franchiser of Mercedes-Benz trucks with DC's authority by the truck wholesale cooperation program.

Presently the programs are to be approved by commercial ministry. "There is no obstacle in policy and approval is very possible. Moreover, it's not critical to establish venture company if all the programs run smoothly. After the settlement of issue of Asia Star-Benz, joint venture is quite natural." said Chen qiaoning, auto analyst of Tianxiang Investment and Consultancy Company.