Geely receives approval to increase stake

Automaker Geely Automobile Holdings Ltd. said in June that it has received final approval from China’s Ministry of Commerce to nearly double its stakes in five car producers in the Geely Group to 91% from 46.8%. The Hong Kong-listed company said it expects the deal to be finalized by June 30, and that it will issue 1.29 billion new shares at HK$1.25 (US$0.16) each for a total of HK$1.61 billion (US$206 million) to its parent, Geely Group Ltd., to finance the deal. Geely Group is China’s largest privately owned automaker by sales. The issue price represents a 36% premium to Geely Automobile’s closing price of HK$0.92 (US$0.12). The five joint-venture companies include Zhejiang Geely Automobile Co. and Shanghai Maple Guorun Automobile Co., two of Geely Automobile’s main car making affiliates. Geely Automobile will become one of the few companies not incorporated in China to own a majority stake in a mainland auto manufacturer. Geely Group is based in eastern Zhejiang province and Geely Automobile is incorporated in the Cayman Islands. (June 19, 2008)