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VW seeks stake in JAC: Reuters
Posted on Wednesday, 10 April 2019 08:57
German car manufacturer Volkswagen (VW) has hired Goldman Sachs to help it acquire a large stake in its Chinese joint venture partner JAC Motors, people familiar with the matter told Reuters.
According to these sources, the potential acquiror, which does not currently own any shares in the target, is keen on taking a holding; however, they cautioned plans are at an early stage.
It is likely that VW will pick up stocks from existing backers, including state-owned parent company Jianghuai Automobile Group Holding, with a 24.0 per cent interest, two of the insiders noted.
The company is billed as the largest foreign automaker in China and the plans to acquire part of JAC Motors comes after Beijing relaxed ownership rules in the country last year.
Previously foreign businesses were not permitted to control any Chinese automaker or joint venture; however, caps were removed last year making full electric and plug-in hybrid vehicle makers eligible to own peers in the country.
According to Reuters, limits on commercial car manufacturers are expected to ease in 2020 and the wider automobile market in 2022.
VW, which had a market capitalisation of EUR 75.75 billion yesterday, would have to pay a premium for shares as JAC Motors’ stockholders cannot sell for less than book value, currently trading at a trailing price-to-book ratio of 0.84.
The company made other headlines today as it is reportedly in talks with SK Innovation to set up a separate battery-making joint venture and potentially build a factory together in China.
When contacted by Reuters, a spokesperson for the German group said: “We are carefully watching what the implications are for our business and for our joint venture partners. In this regard we will explore all possible options together with all stakeholders to secure long-term success in China.”
JAC Motors and its parent did not respond to requests for comment and Goldman Sachs declined when asked by the news provider for a statement.
© Zephus Ltd