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SHANGHAI May 19 China's Guangzhou Automobile
has reached an initial agreement with Hunan Changfeng Motor Co
600991.SS to take a major stake, possibly up to 30 percent, in
the Chinese sport utility vehicle maker, a source with knowledge
of the matter said on Tuesday.
The deal would make Guangzhou Auto the largest shareholder
of Changfeng, which has a market capitalisation of 5.78 billion
yuan ($846.7 million) and is partly owned by Japan's Mitsubishi
Motors Corp (7211.T), the source told Reuters.
Guangzhou Auto operates car manufacturing ventures with
Toyota Motor (7203.T) and Honda Motor (7267.T).
The source said final terms of the deal had yet to be
hammered out but Guangzhou Auto's stake in Changfeng was
unlikely to exceed 30 percent. Changfeng is currently 50.98
percent owned by its parent group, the source added.
Changfeng's shares were suspended from trade on Tuesday
pending announcement of a major restructuring deal.
Mitsubishi Motors, which owns 14.59 percent of Changfeng,
will remain a major shareholder after the restructuring deal,
the source added.
(Reporting by Fang Yan and Edmund Klamann)