China's third-largest car maker Dongfeng Motor Group Co is in
talks to acquire smaller home rival Hafei Automobile Group, people
close to the deal said.
The buyout might be the latest merger and acquisition deal in
China's auto industry following the alliance of SAIC Motor and
Nanjing Auto last month as the nation encourages industrial tie-ups
to increase competitiveness against overseas peers.
Wuhan-based Dongfeng has already launched a due diligence probe
against the mini van maker Hafei, the people, who preferred to
remain anonymous, said yesterday.
Zhou Mi, a spokesman of Dongfeng Motor, didn't deny the possible
takeover, saying he was not aware of the issue yet. Officials from
Hafei were not available for comment yesterday.
Details of the deal emerged as part of consolidation plans of
China National Aviation Corp Group, or CNAC, which plans to exit
the auto business and focus on the airline and aviation-related
sector.
CNAC, the parent company of China's second-largest carrier Air
China, also has other auto-related assets in an engine manufacturer
and Chang He Auto, the Chinese partner of Japan's Suzuki Motor
Corp.
"Dongfeng will benefit from an expanded output with Hafei's
facilities in north China and a more complete product line-up with
its small engine-sized vehicle," said Dong Jianhua, an auto analyst
at Southwest Securities Co Ltd.
"The deal will also help Hafei enter the profitable and
passenger car segment."
(Shanghai Daily January 25, 2008)
