Global player will pay 816.7m yuan, be No2 shareholder in light vehicle maker DaimlerChrysler of Germany, the world's largest truckmaker, will pay 816.75 million yuan for a 24 per cent stake of Beiqi Foton Motor, China's biggest light commercial vehicle producer. Shares of Shanghai-listed Foton jumped 4.43 per cent to 3.77 yuan on the news yesterday. The stock is up about 30 per cent for the year. DaimlerChrysler will pay 2.75 yuan per share for 297 million new shares, making it Foton's second-largest shareholder after its parent company, Beijing Automotive Industry Holdings. Foton will also issue 129 million shares to its parent at the same price. Proceeds from the private placement will be used to upgrade facilities, build a research and development centre and repay bank loans, Foton said. According to regulations governing foreign strategic investors in mainland-listed companies, DaimlerChrysler is required to buy at least 10 per cent of Foton's shares and hold them for at least three years. Foreign carmakers are also restricted to forming partnerships with just two domestic passenger carmakers and two commercial vehicle producers. 'DaimlerChrysler is a relative latecomer to China and it is having to catch up by taking stakes in established local players,' according to Fitch analyst Matthew Kong. DaimlerChrysler has a passenger vehicle project with Beijing Automotive Industry Holdings, Foton's parent company, making Jeeps and Mercedes-Benz cars. It has a commercial vehicle tie-up with Fujian Motor Industry Group and with Jiangsu Yaxing Motor Coach Group to produce passenger buses, but analysts say DaimlerChrysler plans to exit this investment because of Yaxing's poor performance. Foton bounced back from a 45.9 million yuan net loss in the first half to register a 25 million yuan profit in the third quarter on sales which jumped 36 per cent to 4.06 billion yuan. 'Chinese manufacturers are already successful in light and medium truck production, but Daimler has strong expertise in making heavy-duty trucks so this investment will help Foton to expand business in a new market segment,' Mr Kong said. In the first nine months, sales of commercial vehicles in China reached 1.49 million units, up 12 per cent from a year earlier, including 956,000 trucks, up 10.6 per cent year on year, according to figures from Fitch Ratings. Vehicle sales growth in China is expected to continue apace with the booming economy while truck sales in traditional developed markets such as Japan, the United States and Europe are predicted to drop significantly next year. DaimlerChrysler's investment in Foton is subject to approval from the Ministry of Commerce, China Securities Regulatory Commission and Foton shareholders. ROADS CONVERGE Beiqi Foton Motor is China's biggest light vehicle maker DaimlerChrysler will buy 297m new shares at 2.75 yuan each Foton will use proceeds for R&D centre and to repay bank loans
