BEIJING, Sept 14 - Guangzhou Automobile Group (GAC) disclosed on Monday that it has signed a letter of intent with fellow domestic automaker FAW Group to purchase part of FAW’s holding in an unnamed vehicle-manufacturing joint venture. The proposed transaction would be effected through a share issuance and accompanied by a suggested capital raise to support the arrangement.
In a filing to the Shanghai Stock Exchange, GAC said that, if the transaction is completed as outlined in the letter of intent, FAW would become the company’s second-largest shareholder with strategic influence. The announcement also noted that no definitive transaction agreement has been executed, and completion remains contingent on both internal approvals within the companies and any required regulatory clearance.
The filing explained that the joint venture’s name is being kept confidential at this stage because the transaction involves an overseas-listed company. GAC further said that its Shanghai-listed A-shares have been suspended from trading beginning September 14, with the suspension expected to last no more than 10 trading days.
GAC described the current document as a letter of intent rather than a binding sale-and-purchase agreement, underlining that the proposal is preliminary and subject to change pending the formalization of definitive transaction documents and completion of the applicable approval processes.
The filing did not provide additional operational details about the joint venture or the precise stake to be acquired. It likewise did not disclose specific financial terms for the share issuance or the proposed capital raise. Those elements remain undetermined in the absence of a signed definitive agreement.
Market trading of Guangzhou Automobile Group Co Ltd Class A shares, which trade under ticker 601238 on the Shanghai exchange, has been paused in line with the company’s disclosure. The company indicated the suspension is temporary and tied to the announced transaction process.
Clear summary
GAC and FAW have entered a non-binding letter of intent whereby GAC would acquire part of FAW’s stake in a currently unnamed auto joint venture via a share issuance plus a supporting capital raise. The JV name is being withheld due to involvement of an overseas-listed entity. No final agreement has been signed and the plan requires internal and regulatory approvals. GAC’s A-shares were suspended from September 14 and the suspension is expected to last no more than 10 trading days.