Dongfeng Motor Group at near 8-year peak on privatisation plan
FILE PHOTO: Workers work on plantation near the headquarters of Dongfeng Motor Corp in Wuhan, Hubei province, China August 10, 2020. Picture taken August 10, 2020. REUTERS/Yilei Sun/File Photo
HONG KONG: Shares of Chinese state-owned automaker Dongfeng Motor Group surged 69.2 per cent as they resumed trade on Monday, after the company's parent said on Friday it planned to take the automaker private at a premium.
The stock opened at HK$10.10 (US$1.29) per share, the highest since November 2017, before trimming gains later to trade at HK$9.25, still up 54.9 per cent. It was the biggest percentage gainer on the Hang Seng Automotive Index, which rose 1.7 per cent.
The broader Hang Seng Index was up 1.2 per cent.
Dongfeng Motor Corp, the parent, said it would take Dongfeng Motor Group private in a deal valued at HK$55.13 billion (US$7.06 billion), while separately listing its electric vehicle arm, Voyah, in Hong Kong.
Under the deal, Dongfeng Motor Corp will pay HK$6.68 per share, representing an 11.9 per cent premium to Dongfeng Motor Group's last close on August 8 before trading on the stock was halted.
The move to privatise comes as China's automakers are locked in a bruising, years-long price war that has raised costs and squeezed margins. Regulators in Beijing have recently stepped up scrutiny of the intense competition.
In February, shares in Dongfeng Motor Group surged more than 80 per cent after it said its parent was planning a restructuring, fuelling speculation of consolidation among state-owned automakers.
