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Company buys into truck maker
By Gong Zhengzheng (China Daily)
Updated: 2006-12-01 09:03
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DaimlerChrysler will buy 297 million shares issued by Foton for 816.8 million yuan (US$104.1 million), the Chinese company said yesterday in a statement to the Shanghai Stock Exchange.
The deal will enable DaimlerChrysler to have 24 per cent of Foton and become its second biggest shareholder after Beijing Automotive Industry Corp (BAIC), China's No 5 vehicle manufacturer.
Foton said DaimlerChrysler will be its strategic overseas investor which means that the German-US automaker will hold its stake for at least three years according to government rules released in January.
Foton closed at 3.77 yuan (48 US cents) per share yesterday, up 4.43 per cent.
According to a strategic agreement reached in 2003, DaimlerChrysler planned to make Mercedes-Benz sedans at an existing joint venture with BAIC and form a new venture with Foton to make Mercedes-Benz heavy-duty trucks. Mercedes-Benz is an affiliate brand of DaimlerChrysler.
Production of Mercedes-Benz E-Class sedans kicked off at the beginning of this year in Beijing.
However, the plan to form a truck venture with Foton has been suspended as a result of DaimlerChryler's multiple partnerships with different Chinese companies and restrictions from the nation's auto industry policy.
DaimlerChrysler in 1997 formed a joint venture with Yangzhou Yaxing Motor Coach Co in Yangzhou, East China's Jiangsu Province, to produce Mercedes-Benz large-sized buses.
At the end of 2003, DaimlerChrysler also clinched a deal with Fujian Automotive Industry Corp in Fujian Province to make Mercedes-Benz light-duty trucks. The project has been approved by Chinese regulators.
However, according to the Chinese policy, a foreign automaker is allowed to set up at most two joint ventures in China with different domestic companies to produce the same types of automobiles, passenger vehicles or commercial vehicles. Both trucks and buses are seen as commercial vehicles.
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