Shanghai Automotive Industrial Corp., SAIC, has signed a memorandum of
understanding with Nanjing Automobile, the company which outbid it for
the leftovers of failed UK carmaker MG Rover - although a previous
deal enabled SAIC to launch its Roewe car last year, based on Rover
technology.
Under the new agreement, SAIC and Nanjing will discuss
far-reaching cooperation and - possibly - a merger of their automobile
divisions.
A source from Nanjing Autos revealed that the parties have a general
agreement, but the specifics of the cooperation will not be released
anytime soon. The success of any deal will be heavily reliant on the
Chinese government's approval.
"We have been looking forward to cooperating with SAIC and we are even
willing to make concessions on shareholdings, if necessary," said Wang
Haoliang, Chairman of Nanjing Autos. "But we will insist on certain
issues, for example our revenue will remain with Nanjing."
According to experts, SAIC insists on retaining control over the
merger while Nanjing Autos is accepting only a merger of equals. It is
expected that government bodies would support a merger, since it would
create a potentially powerful Chinese car company in a very fragmented
market.
Last update : Saturday, 04 August 2007
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