Baoneng said to acquire stake in Chery with RMB 25 to 27 billion
Shanghai (Gasgoo)- Baoneng Group reportedly plans to acquire stake of Chery Auto with a total of RMB 25-27 billion, and aims to be the biggest shareholder of the automaker. It is said that both parties will announce the merger and acquisition (M&A) as early as next month. Once the acquisition is finished, Chery Auto will transform from a state-owned company to a private automaker.
About half a year ago, a negotiating team, which is formed by representatives of Wuhu government, Wuhu Construction Investment Co., Ltd. and Chery's senior executives, had contacted with Baoneng Group and Industrial Bank Co., Ltd. with a purpose to get funds through selling a certain part of Chery's stake, due to the worsening cash flow of Chery and urgency of supplementing operating fund.
The news that Baoneng will acquire Chery is not a secret any more, according to insiders of Chery. They also disclosed that Baoneng and Chery have been negotiating the acquisition for a long time, and the announcement will be released this month or next month.
It is also revealed by the person who is close to Baoneng that the group and Chery had reached a consensus on the stake acquisition. Both parties are just waiting for a proper time to expose it.
It is rumored in last October that the ultimate goal for Baoneng's acquisition of Qoros is to acquire Chery. Local media also revealed that Yao Zhenhua, president of Baoneng Group once showed his intention of acquiring Chery Auto as early as in October, 2017.
Chery's M&A will benefit the automaker in the long run. On one hand, Baoneng can provide funds for Chery. On the other hand, the system advantages of private company will revive Chery. Besides, Chery boasts superior auto technologies in chassis, engine, platform, intelligent connection and autonomous driving. It is the product planning chaos, poor product definiton and unattractive design style, rather than lacking core technologies that result in Chery's sales slump.
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