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Nanjing Auto to get a 10% stake in SAIC for MG
By Yoann Besnard on 14 December 2007 | (0) Comments | Permalink
It might be the most interesting and worrying partnership as SAIC and Nanjing Auto might sign an agreement next according to anonymous companies' sources. Nanjing Auto would give its MG assets in exchange of a stake in SAIC less than 10%.
In the muddle that followed MG-Rover collapse, the two car makers got a share of the pie, but not what they expected. Nanjing Auto got MG while SAIC won various rights linked to Rover cars. Since then, they have been working hard in their corner to develop a range and a brand with similar vehicles. Unhappy with the situation, the Chinese government, shareholder of the two contenders ordered them to merge.
From the two manufacturers, Nanjing Auto would benefit the most from a partnership with SAIC. Indeed, it is smaller and has cash flow problems which slows down the development of the MG brand. Furthermore its joint venture with Fiat doesn't perform well. But this doesn't mean that SAIC has to refuse the merger. Analysts think that Nanjing Auto assets would be very valuable for SAIC as it suffers from competing fiercely with FAW Group and Dongfeng Motors on the commercial vehicles market. in the merger, SAIC would get the Nanjing Auto's commercial vehicles business and 50% of the Fiat joint venture.
According to insiders, SAIC and Nanjing Auto will sign an agreement before the end of the month.
