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Pang Da-Saab partnership faces uncertainty
By Jin Jing |
May 20, 2011, Friday
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Print Edition
Print Edition
The surprising tie-up between China's auto distributor Pang Da Automobile Trade and cash-strapped Saab may still face uncertainty due to the difficulties in gaining government approval, according to industrial analysts.
Netherlands-based Spyker Cars, the parent of the Saab unit, said on Monday that Pang Da will inject 65 million euros (US$92 million) for a 24 percent stake of Spyker and the two companies will form a 50-50 joint venture in China for distributing Saab cars.
The plan also includes a car-manufacturing joint venture, which will be 50 percent-owned by Saab while leaving the rest to be held by Pang Da and another Chinese car maker yet to be decided.
Spyker said the deal is also subject to approval from the Chinese government, the European Investment Bank, previous Saab owner General Motors and the Swedish National Debt Office.
Independent auto analyst Jia Xinguang said it is not likely Pang Da will get the nod from the government.
"As an auto-sales group, Pang Da lacks the car-manufacturing ability," said Jia.
"Having two Chinese companies share the 50 percent stake in one Sino-foreign joint venture is also not allowed."
According to China's regulations on new joint ventures, it allows one Chinese company to hold a 50 percent stake with one or several foreign counterparts sharing the remainder.
Jia also said that the acquisition carries a lot of risks for Pang Da as no government will provide a warrant for the deal.
Spyker has been seeking cash to save its Saab unit from collapse, which was forced to stop production at a plant in Sweden in April. The announcement came three days after Sypker's cooperation with China's Hawtai collapsed due to the Chinese company failing to get necessary approval from authorities in time.
Hebei Province-based Pang Da said the cooperation will help raise brand image and lay foundations for distributing premier models in China.
Market observers also questioned Pang Da's financial strength for Saab's future expansion.
Zhang Xin, an analyst from Guotai Junan Securities Co said, "Any cooperation is not as easy as expected. Besides the government approval, Pang Da will also need huge investment on labor costs and future operation for Saab."
Pang Da raised 6 billion yuan (US$923 million) in an initial public offering in April, making it the first auto-sales group to float shares on the mainland stock market.
According to Jia, Pang Da reported a sales revenue of 53.8 billion yuan last year with a profit of 1.24 billion yuan. The company mainly distribute Japan's Subaru models in China in addition to lower-end vehicles.
Shanghai-listed Pang Da hiked a combined 3.56 percent on Tuesday and Wednesday, compared with an overall 0.83 percent rise in the benchmark Shanghai Composite Index.
Netherlands-based Spyker Cars, the parent of the Saab unit, said on Monday that Pang Da will inject 65 million euros (US$92 million) for a 24 percent stake of Spyker and the two companies will form a 50-50 joint venture in China for distributing Saab cars.
The plan also includes a car-manufacturing joint venture, which will be 50 percent-owned by Saab while leaving the rest to be held by Pang Da and another Chinese car maker yet to be decided.
Spyker said the deal is also subject to approval from the Chinese government, the European Investment Bank, previous Saab owner General Motors and the Swedish National Debt Office.
Independent auto analyst Jia Xinguang said it is not likely Pang Da will get the nod from the government.
"As an auto-sales group, Pang Da lacks the car-manufacturing ability," said Jia.
"Having two Chinese companies share the 50 percent stake in one Sino-foreign joint venture is also not allowed."
According to China's regulations on new joint ventures, it allows one Chinese company to hold a 50 percent stake with one or several foreign counterparts sharing the remainder.
Jia also said that the acquisition carries a lot of risks for Pang Da as no government will provide a warrant for the deal.
Spyker has been seeking cash to save its Saab unit from collapse, which was forced to stop production at a plant in Sweden in April. The announcement came three days after Sypker's cooperation with China's Hawtai collapsed due to the Chinese company failing to get necessary approval from authorities in time.
Hebei Province-based Pang Da said the cooperation will help raise brand image and lay foundations for distributing premier models in China.
Market observers also questioned Pang Da's financial strength for Saab's future expansion.
Zhang Xin, an analyst from Guotai Junan Securities Co said, "Any cooperation is not as easy as expected. Besides the government approval, Pang Da will also need huge investment on labor costs and future operation for Saab."
Pang Da raised 6 billion yuan (US$923 million) in an initial public offering in April, making it the first auto-sales group to float shares on the mainland stock market.
According to Jia, Pang Da reported a sales revenue of 53.8 billion yuan last year with a profit of 1.24 billion yuan. The company mainly distribute Japan's Subaru models in China in addition to lower-end vehicles.
Shanghai-listed Pang Da hiked a combined 3.56 percent on Tuesday and Wednesday, compared with an overall 0.83 percent rise in the benchmark Shanghai Composite Index.
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