At 9 o'clock in the morning on August 6th, at the staff meeting of the leaders at or above the department level held by the Nanjing Automobile Group, Yu Jianwei, general manager of the Nanjing Automobile Group, briefed the 300 employees who were present on the scene of the cooperation with SAIC and disclosed the situation with SAIC Motor. Details of initial cooperation intention reached through communication.
During the three-hour meeting, according to Yu Jianwei’s message, SAIC and NAC will conduct comprehensive cooperation. The assets of both parties will be integrated and managed together. SAIC will acquire a 100% controlling share of NAC; and in exchange The existing four major shareholders of Nanjing Auto will hold some shares in SAIC.
The reporter was informed that SAIC currently only agrees that the existing shareholders of NAC will own 10% of SAIC (Shangqi Group and SAIC) after the merger, and that NAC hopes to have a minimum ratio of 15%.
The reporter's verification of different individuals confirmed the details of the above agreement, but it did not rule out fine-tuning after due diligence.
High-quality assets into listed companies
For this cooperation between the two sides, SAIC and NAC have their own principles. The three principles of SAIC are: to use its own brand as the cornerstone of cooperation; to integrate NAC into the planning of the entire group; to operate taxation and GDP in Nanjing. The three principles of NAC are to maintain the main position of NAC Group; the registration place will remain unchanged; the tax payment channel will remain unchanged.
The reporter learned that the initial cooperation plan between Nanjing Auto and SAIC is based on these principles.
Previously, SAIC had approached the four major shareholders of Nanjing Auto and indicated that it intends to acquire the shares of Nanjing Automobile Group held by Nanchang’s existing four major shareholders. However, Yu Jianwei’s plan conveyed on August 6th, SAIC did not acquire cash. Instead, it is acquired with the same value of shares. That is, SAIC will convert some of the shares of SAIC and SAIC to 100% of the shares of NAC held by the four major shareholders of NAC. As a result, SAIC will become a wholly-owned controlling shareholder of NAC, and NAC will be included in the planning of SAIC's entire group. At the same time, because SAIC acquired the shares of the shareholders of Nanjing Auto, it is still an independent legal entity with a dominant position for Nanjing Auto.
The four major shareholders of the Nanjing Automobile Group, although they gave up the shares held by Nanjing Automobile, they will be exchanged for SAIC shares.
The reporter learned from the senior level of SAIC Group that SAIC Motor Group, after holding the Nanjing Automobile Group, intends to split the assets of Nanjing Automobile into the whole vehicle part and the rest. In accordance with the preliminary planning of both parties, including vehicle assets such as Iveco Leap, MG Grandeur, Nanjing Fiat, Magnesite UK Base and Wuxi Xin Yatu, and including Ningbo Iveco Qianqiao Co., Ltd. (Ningbo Qianqiao), Nanqi Special Vehicle Company The companies including the (special vehicle) and the Nanjing Automobile Research Institute (research institute) will be included in the SAIC shares. The remaining parts and components of the Nanjing Automobile Group, its headquarters and training and related subsidiaries will enter the SAIC Group.
"The part of the company that entered SAIC Motor is a company with profitability, good development potential, and good efficiency," said a mid-level member of Nanjing Automobile. Ningbo Qianqiao and Special Purpose Vehicle are basically the two best subsidiaries of the current business of Nanfang Auto Parts Business Department, especially the special-purpose vehicle business, which even offsets the loss of all other parts and components of Nanjing Auto. The Institute is also one of the earliest institutes in China. More importantly, the Institute currently has more than 20 engine test machines. This part of the assets is of great value. Such assets entered into SAIC shares will not affect the quality of listed companies.
The rest of the integration of SAIC, Nanjing, this part of the assets is also expected to be further developed.
Conversion ratio is still discussing
From April 19th, SAIC Chairman Hu Maoyuan said publicly for the first time to cooperate with Nanjing Auto and signed an agreement of intent on July 27th. Cooperation between SAIC and SAIC went smoothly. At present, SAIC and Nanjing Auto's related personnel have set up a total of five professional working groups, including asset assessment, product investment planning, legal, spare parts and service trade, and comprehensive groups.
The reporter was informed that SAIC’s due diligence on Nanjing Auto may end in more than one month and will be promoted as a model of cooperation in the Yangtze River Delta region.
The reporter learned that Nanjing Auto's shareholders are still interested in raising their shareholding in SAIC through intergovernmental negotiations.
On August 8th, the senior engineer of SAIC Iveco reported to the due diligence team. According to insiders from SAIC, NAC’s assessment of Iveco’s assets is not less than RMB 5 billion, plus Leap's assets. Only NAC’s assets exceed 7 billion RMB. The insider of the Nanjing Automobile Group revealed that Wang Haoliang’s psychological price for MG has reached RMB 10 billion.
Even so, according to reports, the total assets of SAIC Motor currently exceed RMB 100 billion, and SAIC's information is that the assets of the SAIC Group and the Nanjing Automobile Group have reached an initial consensus of less than RMB 20 billion. Therefore, according to the preliminary plan, the Vapor holds up to 10%-15% of shares in SAIC listed companies and group companies.
However, it is clear that Nanjing Auto's shareholders still hope that the ratio will be higher. The reporter learned from the high-level department of Nanjing Auto that the senior management of Nanjing Auto has reported to the working group headed by Chen Jiabao and hopes that they can coordinate this most thorny issue, and even the top level of the two governments will conduct consultations.
The whereabouts of the MG
According to Yu Jianwei’s preliminary plan, after the merger of SAIC and Nanjing Auto, the Nanhui MG MG brand will continue to be retained, and SAIC will retain the Roewe brand. Although the same model to create two brands, it will inevitably cause some waste of resources, but the development of MG and Roewe has its own focus.
The reporter was informed that after the Nanjing Automobile Group had communicated with SAIC and heard opinions from relevant parties in Jiangsu Province, it considered that Nanqi MG and SAIC Roewe would jointly unite and operate under the joint subsidiary model. From the division of labor, the MG will be more focused on exports, and Roewe will pay more attention to the domestic market. Nanqi MG insider revealed to reporters that the reason for this is that Roewe has formed a certain influence in the domestic market. If MG is also staring at the domestic market, it is impossible to achieve the same in a market with two identical products. Good results; on the contrary, MG MG has a certain reputation in overseas, but also has a certain channel, to do the export can achieve the complementary advantages of the two.
From the point of view of the production base, in accordance with the plans of both parties, SAIC Yizheng Base will be assigned to Nanjing in the future. At present, SAIC Motor’s investment in Shanghai Lingang New City has not yet obtained the approval of the state, and the Grand Mercure company has not yet been approved. Informed sources disclosed to reporters that the preliminary agreement reached between the two parties was that Nanjing Automobile was responsible for the production of existing and future products, and it was sold by SAIC, because Nanjing had more production cost advantages than Shanghai and had a complete factory building. SAIC’s marketing advantages are obvious to all. Such a cooperation approach is actually to integrate the advantages of both parties. At the same time, the reporter was informed that it is now clear that the MG's engine factory must supply both MG and Roewe.
It is Iveco's largest and best quality vehicle asset. Yu Jianwei conveyed at the working meeting that Iveco will enter SAIC Motor as a vehicle company. This is equivalent to becoming a joint venture with Shanghai GM and Shanghai Volkswagen. The existing business will follow the normal track.
As for the most difficult piece of assets - Nanjing Fiat, according to Yu Jianwei's report to the Workers' Representative Conference, in the first half of this year, Nanjing Fiat lost more than one billion yuan, and Fiat has been insolvent quickly.
On August 7, 2007, Fiat Group Automobiles and Chery Automobile signed the "MOU" yesterday, and the two sides will establish a 50:50 joint venture company to produce passenger cars. The joint venture company to be established in Wuhu, Anhui Province, will carry out the production and sales of the Alfa Romeo and Fiat brand cars under the Fiat Group automobile and the brand cars of Chery. This means that Alfa Romeo has already spent the past on Chery in a product that Fiat is most likely to succeed in the Chinese market. Prior to this, it was reported that Fiat and Nanjing Automobile had split up.
View related topics: SAIC commercial vehicle expansion
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