In 2007, global asset restructuring began in full swing. China's auto industry has also been involved in the wave of mergers and acquisitions. From the private auto parts and components group just a few years ago in the wading industry, to the auto giants headed by the Shanghai Automotive Industry Group, and to the outsiders who are optimistic about the Chinese auto industry, they are staring at the opportunity for restructuring the Chinese auto industry.
Different from the past, the restructuring of the Chinese auto industry is now more diverse, with a larger scale and a broader scope.
First, with the large-scale automobile groups beginning to intervene in reorganization, a new reorganization model of cross-regional restructuring and equity-based pricing has emerged.
On December 26, 2007, the South merger and acquisition case was finalized. SAIC Motor Group acquired the equity of Yuejin Automobile Group for 320 million shares of Shanghai Auto, including the entire equity of Nanjing Automotive Group and Donghua Company’s 75% equity.
Shangnan M&A has more significant implications for the capital market: it has created a precedent for the comprehensive restructuring of large auto groups in recent years. Once the formal transaction is completed, SAIC Group, which is located in Shanghai, and Nanjing Automobile Group, located in Nanjing, Jiangsu Province, will be fully integrated into one company. SAIC Motor will also set aside FAW Group with no suspense and become the first domestic auto group with sales and sales revenue. .
“Shangnan M&A has opened up a precedent in the history of China’s auto mergers and acquisitions. That is, the final form of payment for purchases is the shares of listed companies, that is, Shanghai Auto’s shares.†Sun Muzi, auto analyst at Anxin Securities Research Institute, points out that “the capital in mature countries†In the reorganization of mergers and acquisitions, the use of equity instead of cash payment is a common pattern."
The positive effect of the merger and acquisition of the South is fermenting. According to the Shanghai Securities News, Dongfeng Motor Group is in talks with China Aviation Business Administration to take over Hafei Automobile and Changhe Automobile. AVIC owns three listed automotive companies, Hafei, Dongan Power, and Changhe Automotive. The AviChina who wants to withdraw from the auto industry and devote themselves to the aviation industry even intends to throw out most of the assets related to automobiles. If these three assets fall into the hands of companies with resource integration capabilities at a reasonable price, perhaps a large auto group spanning two regions will be born again. According to sources, Dongfeng Motor plans to spend 2 billion yuan to control Hafei Motors.
Foreign research institutes have noticed that China’s large auto groups have become the main players in the restructuring. The analysis report of the Institute of Modern Culture of Japan on the competitiveness of China's auto industry pointed out that since the 1980s, the Chinese government has been trying to start a group reorganization with the axis of the Grand Auto Company; today, with the intensification of global competition, the Chinese government This policy will still be adhered to. In addition, the report believes that the smooth and rapid reorganization will benefit China’s auto industry’s economies of scale.
Second, there have been some huge fund reorganization cases in the field of automobile accessory parts.
In 2007, Xinyi Glass Group acquired the entire equity of Shenzhen CSG Automotive Glass Co., Ltd., a subsidiary of China CSG Group, for 232.64 million yuan in cash. This is both the first acquisition of Xinyi Glass Group and the rare large-scale acquisition event in the automotive glass industry in recent years.
Li Yinyi, chairman of Xinyi Glass Group, stated that the acquisition will help the Group to rapidly expand its production scale while reducing one competitor. It is understood that auto glass companies have a huge disparity in sales of 1 million products and 100,000 pieces of profits, and they are even making a leap from making money to making money. Therefore, this acquisition made the originally strong Xinyi Glass Group quickly have the potential to compete with Fuyao Glass.
Thirdly, outsiders who are optimistic about the development prospects of China's auto industry are rapidly entering the auto industry through restructuring. Some pre-comprehensive integrated groups have even started cross-regional restructuring. Hunan Huatian Industrial Holding Group, which started with hotel travel, is on the list. Its 2007 restructuring result was Shandong Yinhe Power Co., Ltd.
On September 19, 2007, Huatian Industrial Holdings Group reorganized the former Shandong Cylinder Liner Co., Ltd. and Shandong Chiyu Engine Co., Ltd. The new company was named Shandong Yinhe Power Co., Ltd. (abbreviation: Shandong Yinhe). Shandong Yinhe moves quite quickly: 100 days later (ie December 28), the Linyi County Industrial Zone in Weifang City was formally put into production to produce the core components (cylinder liners) for diesel engines. The project has a total investment of 110 million yuan, the first phase of investment 70 million yuan, annual production of 3 million cylinder liners.
For the wave of reorganization of the automobile, the views of the operating companies and off-site viewers are also quite consistent. According to a survey conducted by the KPMG Certified Public Accountants of the world’s automotive industry, the majority of automotive companies surveyed believe that the auto industry’s M&A activity will increase in the next five years, with Asian supporters accounting for approximately 81%. In the eyes of most people, the globalization of the automotive industry, technology and product updates, cost reductions and efficiency gains have become an inevitable trend and driving force for the continued development of the automotive industry, and the momentum of global mergers and acquisitions will continue.