SAIC board clears transfer of 1% JV stake to GM
DETROIT (Bloomberg) -- General Motors Co. said the board of its China partner Shanghai Automotive Industry Corp. approved the transfer of a 1 percent ownership stake in their joint venture to the U.S. automaker.
SAIC said the purchase price was $91.4 million (580 million yuan).
The move, which still requires Chinese government approval, allows Detroit-based GM to regain equal control of the partnership in the world's largest automobile market.
The SAIC board approved the transfer on May 24, said Lori Arpin, a spokeswoman for GM.
The deal restores GM’s ability to have equal say on operational decisions in China, three years after it ceded control of the venture by selling a 1 percent stake for $85 million.
GM, which sold more vehicles worldwide than any other carmaker last year, wants to double deliveries in China to 5 million vehicles by 2015.
The two partners said in April they were close to a deal involving the split of Shanghai GM into two units.
Both partners would hold equal stakes in the operations unit, while SAIC retains a 51 percent majority in the sales arm.
That would allow the Chinese company to include the venture’s revenue in its financial statements, the companies said in April.
Morgan Stanley analyst Adam Jonas said at the time that GM’s ability to regain equal control of the joint venture would be an “extremely important” development to help GM roll out global platforms and coordinate product strategy.
The deal also would pave the way for the two partners to deepen ties and enhance GM management’s credibility, Jonas wrote in an April 19 report.
GM, whose first-quarter profit slid 61 percent as losses at its European unit widened, increased deliveries in China 9.4 percent to 972,369 vehicles during the first four months of the year.
The partnership began with equal ownership between the two companies. In 2009, GM sold its stake in Shanghai GM as the Detroit-based parent underwent bankruptcy reorganization in the United States.Contact Automotive News