GAC to pay parent 444.7m yuan for stake

Guangzhou Automobile Group (GAC) said yesterday it will pay 444.76 million yuan (HK$523.84 million) for its parent company's stake in a mainland motorcycle joint venture with Japan's Honda Motors.

The deal will see state-owned Guangzhou Automobile Industry Group inject its 50 per cent stake in Wuyang Honda Motors (Guangzhou) into GAC, which also has carmaking joint ventures with Honda, Toyota, Mitsubishi and Fiat.

GAC will pay the parent firm another 30.96 million yuan for Wuyang's related trademarks.

Following completion, GAC and Honda will each contribute an additional 130 million yuan into the joint venture, which 'will be used by Wuyang Honda mainly for the expansion of its production capacity and in a new production line for electrical motorcycles', GAC said yesterday in a stock exchange announcement. Shares in GAC rose 2.79 per cent after the deal was announced to close at HK$10.72 apiece yesterday.

Since listing by way of introduction in August, GAC has moved to expand capacity at its Guangzhou carmaking joint ventures with Honda and Toyota. The mainland firm also last month launched sales of its self-branded Trumpchi sedans and has a separate joint venture with Fiat based in Hunan province is set to begin production later this year.

The addition of Wuyang Honda comes as the mainland market for motorcycles has resumed steady growth, which had been interrupted by the financial downturn.