Dongfeng Motor Group at near eight-year peak on privatisation plan

[HONG KONG]Shares of Chinese state-owned automaker Dongfeng Motor Group surged 69.2 per cent as they resumed trade on Monday (Aug 25), after the company’s parent said on Friday that it planned to take the automaker private at a premium.

The stock opened at HK$10.10 per share, the highest since November 2017, before trimming gains later to trade at HK$9.25, still up 54.9 per cent. It was the biggest percentage gainer on the Hang Seng Automotive Index, which rose 1.7 per cent.

The broader Hang Seng Index was up 1.2 per cent.

Dongfeng Motor, the parent, said that it would take Dongfeng Motor Group private in a deal valued at HK$55.1 billion (S$9 billion), while separately listing its electric vehicle arm, Voyah, in Hong Kong.

Under the deal, Dongfeng Motor will pay HK$6.68 per share, representing an 11.9 per cent premium to Dongfeng Motor Group’s last close on Aug 8 before trading on the stock was halted.

The move to privatise comes as China’s automakers are locked in a bruising, years-long price war that has raised costs and squeezed margins. Regulators in Beijing have recently stepped up scrutiny of the intense competition.

In February, shares in Dongfeng Motor Group surged more than 80 per cent after it said that its parent was planning a restructuring, fuelling speculation of consolidation among state-owned automakers. REUTERS