Shanghai Automotive, Shanghai Electric finally seals a deal on Shanghai Diesel Engine

Shanghai. September 27 (Gasgoo.com) - Shanghai Electric and Shanghai Automotive Industry Corporation (SAIC) has finally reached a stake-transfering deal on Shanghai Diesel Engine Company, both Shanghai Automotive and Shanghai Diesel Engine announced the deal today. 

Under the deal, Shanghai Electric agrees to transfer 50.32 percent stake of Shanghai Diesel Engine Company it owns to Shanghai Automotive Industry Corporation. Once the transfer completed, Shanghai Electric will no longer hold any stakes of Shanghai Diesel Engine Company. Either Shanghai Automotive or its subsidiary company will become the controlling stake-holder of Shanghai Diesel Engine Comany.

Shanghai Diesel Engine Co produces large diesel engines and environment friendly engines powered by natural gas, and that is what SAIC wants to have, an auto industry analyst said.

Being a leader in diesel engine technology, Shanghai Diesel Engine produces diesel engines to power heavy trucks, buses, engeering machines, ships, agriculture machines and mobile power plants.

The company sold 6,2614 diesel engines in 2006, down 6.3 percent from one earlier; its sales revenue reached 2.988 bln yuan ($396 mln), down 3.9 percent from one year earlier. However, the company posted a net profit of 12.85 mln yuan ($1.7mln) in 2006, up 118.5 percent from one year earlier.

Hu Maoyuan, chairman of SAIC Board of Director, said earlier the acquisition was part of SAIC's efforts to develop commercial vehicles. Due to raising costs and declining prices, passenger vehicles are not as profitable as it was in the past; by contrast, commercial vehicles are becoming more profitable, Hu added.