China's leading automaker SAIC Motor Corp confirmed on Nov. 18 that it had agreed to buy a stake in General Motors, as the auto giant prepared for one of the largest stock offerings in history.
SAIC said its wholly owned unit SAIC Motor HK Investment Ltd had acquired 15.2 million ordinary shares for $500 million, accounting for just under 1% of GM's total equity. The unit paid $33 per share and would raise all the capital from the Hong Kong financial market, SAIC said.
SAIC said its decision to invest in GM was based on "confidence in GM's development prospects."
"GM has regained its cost competitiveness and has made profits for three consecutive quarters this year," the statement said.
In addition, the "U.S. automotive market is gradually stabilizing and rebounding, and strong vehicle demand in emerging markets has provided GM with opportunities for further growth."
SAIC said the "deepening of the strategic partnership" with GM would help the Chinese automaker grow its business, explore overseas markets and enhance its research and development capability.
GM welcomed SAIC's decision to take part in the massive public offering. "We are happy with SAIC's decision to participate in GM's public offering," said Tim Lee, president of GM International Operations.
GM has set a price of $33 per share for a stock listing that is set to garner at least $20.1 billion.
"Our 10 joint ventures with SAIC include some of China's most successful automotive operations. SAIC's participation in GM's public offering represents another milestone in our partnership."
GM said earlier this month it had become the first international carmaker to sell two million vehicles in a year in China, now the world's largest auto market. China's auto sales for 2009 hit 13.64 million units as the nation took over the title of the world's top auto market from the United States.
After last year's breakneck growth, sales slowed in recent months, partially due to seasonal factors, but 2010 is still forecast to see 17 million units shifted -- an increase of about 25% on year.
Copyright Agence France-Presse, 2010