GAC to buy FAW's 50% stake in FAW Toyota with shares under three-way pact with Toyota
In short
China FAW, Toyota and GAC Group signed a new strategic cooperation framework agreement in Guangzhou on October 8. Under the deal, GAC will acquire FAW's 50% stake in FAW Toyota by issuing shares, after which FAW Toyota will keep operating as an independent entity and FAW will become an important strategic shareholder of GAC. FAW Toyota and GAC Toyota are then to form an alliance covering R&D, procurement, production and sales.
Read the full story 2 min read
China FAW, Toyota and GAC Group signed a strategic framework agreement on October 8 under which GAC will acquire the 50% stake in FAW Toyota held by FAW by issuing shares, CLS, Jiemian and 36Kr reported. After the transaction, FAW Toyota will continue to operate as an independent entity and FAW will become an important strategic shareholder of GAC. In a later stage, FAW Toyota and GAC Toyota will form alliance collaboration covering R&D, procurement, production and sales. None of the reports gave a value for the transaction or a timetable for completing it. [ 1 , 2 , 3 , 4 ]
IT Home, citing Guangzhou Daily, reported that the agreement was signed in Guangzhou, Guangdong. Guangzhou party secretary Feng Zhonghua (冯忠华) and mayor Sun Zhiyang (孙志洋) met Toyota president Kenta Kon (近健太) and FAW general manager Liu Yigong (刘亦功) and witnessed the signing. According to the report, the three companies will cooperate on resource integration and optimisation, a regular communication and coordination mechanism, the electrification and intelligent transformation of vehicles, and localised operations. [ 1 ]
Liu said the agreement was an exploration in line with national requirements for the consolidation, upgrading and high-quality development of the car industry, and that FAW and GAC complement each other in location, resources and capabilities. He said the three parties would use capital as a link to cooperate on new-energy transition, joint ventures, technology and supply-chain coordination, creating a new model of a central state-owned enterprise, a local state-owned enterprise and an international carmaker working together. He said FAW would support GAC's reform and development and Toyota's joint-venture business in China, and would seek to bring more resources and projects to Guangzhou. [ 1 ]
IT Home also noted that FAW and Guangzhou Automobile Industry Group (广汽工业) had announced on September 29 that they had signed a strategic cooperation framework agreement to deepen cooperation through asset and capital links. [ 1 ]
Why it matters
The deal brings FAW Toyota and GAC Toyota into alliance collaboration and makes FAW a strategic shareholder in GAC. FAW general manager Liu Yigong (刘亦功) described it as a response to national requirements for consolidation and upgrading of the car industry, and as a new model of cooperation between a central state-owned enterprise, a local state-owned enterprise and an international carmaker.
Key facts
- China FAW, Toyota and GAC Group signed a strategic cooperation framework agreement on October 8. [ 1 , 2 , 3 , 4 ]
- The agreement was signed in Guangzhou, Guangdong. [ 1 ]
- GAC will acquire the 50% stake in FAW Toyota held by FAW by issuing shares. [ 1 , 2 , 3 , 4 ]
- After the transaction, FAW Toyota will continue to operate as an independent entity and FAW will become an important strategic shareholder of GAC. [ 1 , 2 , 3 , 4 ]
- In a later stage, FAW Toyota and GAC Toyota will form an alliance covering R&D, procurement, production and sales. [ 1 , 2 , 3 , 4 ]
- Guangzhou party secretary Feng Zhonghua (冯忠华) and mayor Sun Zhiyang (孙志洋) met Toyota president Kenta Kon (近健太) and FAW general manager Liu Yigong (刘亦功) and witnessed the signing. [ 1 ]
- FAW and Guangzhou Automobile Industry Group (广汽工业) announced a separate strategic cooperation framework agreement on September 29. [ 1 ]
Confirmed by several sources
- FAW, Toyota and GAC signed a strategic framework agreement on October 8. [ 1 , 2 , 3 , 4 ]
- GAC will buy FAW's 50% stake in FAW Toyota by issuing shares. [ 1 , 2 , 3 , 4 ]
- FAW Toyota will remain an independent entity and FAW will become an important strategic shareholder of GAC after the transaction. [ 1 , 2 , 3 , 4 ]
- FAW Toyota and GAC Toyota will form alliance collaboration in R&D, procurement, production and sales. [ 1 , 2 , 3 , 4 ]
Still unclear
- The value of the transaction and the number or price of GAC shares to be issued. None of the documents give financial terms.
- When the share acquisition will be completed. The documents describe the deal only as a framework agreement and give no timetable.
- How the new pact relates to the FAW and Guangzhou Automobile Industry Group (广汽工业) agreement announced on September 29. Only IT Home mentions the earlier agreement and it does not explain the link.