GM wants to get its 1% share back from SAIC

China Car Times wrote:General Motors plans to exercise its option to buy back the 1% stake in Shanghai GM that it sold to partner SAIC last year, reports Bloomberg. GM chief executive Dan Akerson told shareholders of the company’s plans at its recent annual meeting in Detroit.

Early last year, Chinese regulators approved the purchase by SAIC of an additional 1% stake in the 50-50 car joint venture, giving it a majority 51% and leaving GM with 49%. SAIC has since consolidated the venture’s accounts into its balance sheet. The management structure of the company remained unaffected.

However, SAIC has stated that GM could repurchase the stake only if it (SAIC) could include Shanghai GM revenue in its accounts.

Zhang Xin, an analyst with Guotai Junan Securities in Beijing, has warned that GM may find it difficult to repurchase the stake, noting it was “not in the interest of SAIC or the Chinese government to sell.”

SAIC has stated that GM could repurchase the stake only if it (SAIC) could include Shanghai GM revenue in its accounts.

patpending wrote:

SAIC has stated that GM could repurchase the stake only if it (SAIC) could include Shanghai GM revenue in its accounts.

I saw quoted around the William Wang interview that the next MG7 will share a platform with a future Insignia...

patpending wrote:

SAIC has stated that GM could repurchase the stake only if it (SAIC) could include Shanghai GM revenue in its accounts.

implying that SAIC wishes to retain control.

patpending wrote:I saw quoted around the William Wang interview that the next MG7 will share a platform with a future Insignia...

Windy wrote:

patpending wrote:

SAIC has stated that GM could repurchase the stake only if it (SAIC) could include Shanghai GM revenue in its accounts.

implying that SAIC wishes to retain control.

Or maybe just that SAIC wants to be No. 1 in the league tables even if it does not have control.

China Car Times update wrote:General Motors Co (GM.N) expects to conclude a deal to bring the automaker’s stake in its China joint venture back to 50 percent, Chief Executive Daniel Akerson said on Thursday.GM has told its China partner, SAIC, that it wants to buy back the 1 percent stake in Shanghai GM that it sold to the Chinese automaker in 2010 for about $85 million, Akerson said on Thursday.

“We have the right to the option to purchase back that 1 percent and we’ve expressed that,” Akerson told financial analysts on a conference call after GM reported second-quarter results. [ID:nN1E77305C]

Under the terms of its deal with SAIC, which was negotiated in 2009 when GM was looking to raise cash and avoid bankruptcy, GM has an option to buy back the 1 percent stake it sold in Shanghai GM.

Although both automakers have said the terms of their collaboration have not changed, SAIC now ranks as the majority shareholder in the China joint-venture with a 51 percent holding.

GM holds 49 percent of the venture, which commands the leading position in the Chinese auto market.

Akerson said he expected that a deal for GM to buy back its stake in Shanghai GM would close after SAIC completes a capital restructuring it has under way.

SAIC Motor (600104.SS), the vehicle production arm of SAIC Group, is in the process of taking over assets from the parent company in the auto parts, alternative energy and logistics businesses.

“Once that kind of settles down, I think you’ll see the transaction take place,” Akerson said.