In a $127 million deal, SAIC acquires 50.32% stake of Shanghai Diesel

Shanghai, January 3, (Gasgoo.com)--Shanghai Automotive Industry Corporation (SAIC) announced today that it has acquired a 50.32 percent stake of Shanghai Diesel Engine Co. (SDE) for 923.42 million Yuan ($127 million).

 

Last week, Shanghai Electric Group Co Ltd, a company that formerly held 50.32 percent stake of Shanghai Diesel Engine Co., signed an agreement with SAIC to sell up its entire pocession of Shanghai Diesel stakes to SAIC three days after it acquired Nanjing Auto.

 

"The deal will helpShanghai Diesel’s  tap into its market potential and improve its competitiveness. It will also enhance SAIC's capability in commercial vehicle sector," SAIC said in an official announcement.

 

The acquisition of Shanghai Diesel will create a chance for SAIC to catch up in commercial vehicle sector. On the other hand, the deal will also deliver Shanghai Diesel from a difficult situation where it has been hamstrung by a narrow product portfolio coupled with scare orders from auto OEMs, according to SAIC board chairman Hu Maoyuan.

 

Shanghai Diesel, a leader in China's internal-combustion engine industry, makes various types of diesel engines for heavy-duty vehicles, passenger cars, engineering machinery, ships, mobile power station etc. It also exports diesel engines to more than 50 countries and regions around the world.

 

The diesel maker's mid-year financial report shows sales of ship engines slip 64 percent year-on-year due to sluggish river transport industry. Analysts pointed out that Shanghai Diesel’s slow growth was mainly attributable to its inability to work in alliance with major automobile and ship manufacturers.