GAC Group has announced a plan to acquire a stake in a vehicle-manufacturing joint venture from China FAW. The deal involves the issuance of new shares by GAC to facilitate the acquisition and raise additional funds. The companies signed a letter of intent on Monday to integrate their industrial resources.
Following the transaction, FAW is expected to become the second-largest shareholder in GAC. The company stated that the deal will not change its ultimate control or result in a backdoor listing. GAC has not yet disclosed the name of the target joint venture, citing its connection to an overseas-listed entity.
GAC shares on the Shanghai Stock Exchange were suspended on Monday and will remain halted for up to 10 trading days. The company intends to resume trading after the board approves a formal restructuring proposal. Before the suspension, GAC shares were priced at ¥5.09, reflecting a 37.85 percent decline this year.
The proposed deal aligns with recent Chinese government policies aimed at consolidating the automotive industry. Officials from the National Development and Reform Commission have indicated support for large corporate groups to merge and restructure, specifically to integrate research, development, and production resources.
