May 19, 2009 / 3:43 AM / 11 years ago

Guangzhou Auto to buy into Changfeng Motor -source

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SHANGHAI, May 19 (Reuters) - 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. ($1=6.826 Yuan) (Reporting by Fang Yan and Edmund Klamann)

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