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BAIC Group is gradually implementing the "two mergers" plan proposed by Chairman Xu Heyi: Following the acquisition of Zhenjiang Automobiles in Jiangsu Province, the acquisition of BAIC Changhe is expected to close at the end of the month.
Recently, relevant personnel of the Beijing Automotive Group told reporters that "the delivery of Beiqi and Changhe assets is nearing the end. If there is no accident, it should be signed before the end of October."
Prior to this, the SASAC has approved the relocation of Changchanghe Jiangxi Base from the Chang'an Group, which belongs to Jiangxi provincial government. After the reorganization, Beiqi Group will become the largest shareholder of Changhe Auto, and the SASAC of Jiangxi Province and the SASAC of Jingdezhen will also become the second and third largest shareholders through its controlling state-owned enterprise asset management and management company.
For Changhe Automobile, which has experienced twists and turns, what kind of model will be developed after the remarriage? In response, the aforementioned Beijing Automotive Group sources said: "Beiqi has promised that Changhe will remain relatively independent in the future." In other words, the future development of Changhe Automobile is likely to replicate Beiqi Foton's model.
Acquisition barriers have been eliminated
In August this year, after the completion of the acquisition of Zhenjiang Automobile, Beijing Auto's rumors of the acquisition of Changhe Automobile surfaced. At that time, Beiqi Group insiders said: "Beiqi is in contact with Changhe, but the biggest obstacle to this acquisition is the ownership of Changhe Automobile. If BAIC wants to reorganize Changhe, Changhe must first break away from Chang'an Group."
On November 10, 2009, Changhe Automobile and Hafei Automobile were transferred to the newly established Changan Automobile Group by the parent company AVIC.
As early as June of this year, there was news about Changhe’s independence. At that time, there were reports that the Chang'an Group had agreed to the departure of Changhe Automobile and had signed relevant documents with the Jiangxi Provincial State-owned Assets Supervision and Administration Commission. In late July, in the 7th (enlarged) meeting of the 13th Provincial Party Committee of Jiangxi Province, Jiangxi Governor Lu Xinshe stated in the second half of the deployment that he “encourage Changhe Auto and other companies to merge and reorganizeâ€.
“In early October of this year, the relevant national authorities formally approved the Changhe Independence Plan.†The above-mentioned Beijing Automotive Group official said that after this obstacle is removed, the BAIC Group’s acquisition plan will also be closed soon.
“At present, the delivery of assets of Beiqi and Changhe is nearing the end. If there is no accident, it should be signed before the end of October.†The above-mentioned Beijing Automotive Group sources revealed that when Changhe applied for independence, the details of Beijing Automobile's acquisition of Changhe were also in simultaneous negotiations.
However, a person from Beiqi Group Public Relations Department stated: "The progress of this incident is not yet clear, and the specific contractual time has not yet been determined."
According to the negotiation between the two parties, the acquisition of Beiqi was only the Changde Jingdezhen base and the Jiujiang base, and the Hefei base is still owned by the Chang’an Group. After the acquisition of Changhe, BAIC will become the largest shareholder of Changhe Auto, with Jiangxi Province SASAC as the second largest shareholder and Jingdezhen SASAC as the third largest shareholder.
Local governments vigorously integrate
In fact, Beijing Automotive Group has long been planning to acquire Changhe. As early as 2008, Beijing Auto Group had shown plans to acquire Changhe Auto, but Changhe Automobile was eventually placed under the Chang'an Group.
“When selecting the second acquisition target, Beijing Automotive once investigated a number of companies. The reason why Changhe was selected, and can successfully rule out the obstacles to restructuring, the government is an important reason.†The aforementioned Beijing Automotive Group sources said.
On October 12, the matchmaking meeting of the state-owned enterprises in Jiangxi Province and Beijing Municipality was held in Beijing. More than 100 persons in charge of state-owned enterprises in Beijing and Beijing participated in the negotiation and four projects were signed on site. The contracted value was 2.05 billion yuan, and another group of projects achieved preliminary results. The depth of the cooperation between the two places may have laid the foundation for Beiqi’s acquisition of Changhe.
A source said: "Beijing's relevant departments in order to help Beiqi expansion plan, and the Jiangxi Provincial Government is likely to have more in-depth cooperation program, these cooperation may have exceeded the automotive industry."
A person close to the Beijing Automotive Group once told reporters that Beijing Automotive Group, Beijing's largest automaker, is responsible for the development of the city’s auto industry. Beijing's relevant departments set the 12th Five-Year Development Target for Beiqi: Beyond Chang'an, the scale of production and sales will rank among the first camps in the domestic auto industry; it will strive to become the third largest auto group in China.
Therefore, in recent years, BAIC has successively acquired a number of car companies such as Guangdong Baolong, Chongqing Yinxiang and Zhenjiang Automobile. On the basis of scale expansion, BAIC's production and sales scale has also achieved substantial growth. In the first half of this year, the production and sales scale of BAIC Group has exceeded 1 million vehicles. "This year, the group's production and sales scale is likely to reach 2 million vehicles." Han Yonggui, executive vice president of Beijing Automotive Group, once said.
At present, the production and sales scale of BAIC Group is equivalent to that of Chang'an Group. According to data released by Changan Automobile, its production and sales in the first half of this year were 1.04 million and 1.05 million, respectively.
"Beiqi's acquisition of Changhe is completed, Chang'an's strength will be weakened, and BAIC's strength will increase." Car analyst Zhang Zhiyong believes.
According to previous news, Jiangling Motors, as a local company in Jiangxi Province, had submitted a plan to reorganize Changhe Automobile to avoid "flood and water outflow." However, relevant persons from the Securities Department of Jiangling Motors told reporters: "The group has not yet heard about the acquisition."
Changhe operations will remain relatively independent
Changhe's development after its ownership in Changan is not smooth, which is an important reason for its “remarriageâ€.
According to statistics, Changhe Automotive sold 180,000 vehicles in 2010; it decreased by 33.3% year-on-year in 2011 to 120,000; in 2012 it continued to fall to 113,000 vehicles. From January to September this year, Changhe Automobile sold 70,300 vehicles, which was a decrease of 13.95% from the same period of last year, which was 81,700 units.
In addition, when Changan Group established a new joint venture company, Changan Mazda, it had another “idea†for Changhe’s passenger car production qualifications, but it was opposed by Changhe.
A person close to the Beijing Automotive Group believes that: "Beiqi after the reorganization of Changhe, not only need to enter Changhe, sort out the product line, introduce new products, but also should learn Chang'an lessons, properly handle the relationship between management."
Beiqi has also prepared for this. “As soon as the reorganization is completed, Beiqi will become a major shareholder of Changhe, but the development of Changhe will remain relatively independent. In the early stage, BAIC only sent a financial executive to enter.†The above Beiqi Group source told reporters.
Zhang Zhiyong believes that in accordance with the above model, the future of Beiqi and Changhe is equivalent to the relationship between Beiqi and Beiqi Foton. Under the Beiqi Group, Beiqi Foton, as a listed company, is positioned in the commercial vehicle segment and has been operating more independently. In the future, Beijing Auto Group will maintain its independent development while translating blood to Changhe Automobile, which is beneficial to the balanced transition and market recovery of Changhe Auto after the acquisition.
Changhe's "remarry" BAIC near the signing or copying the Foton model