The transaction price was RMB 80,593,000.
Editor’s note: This article comes from “ Future Car Daily ” (WeChat public account ID: auto-time), author: Jiaoman Ting.
Author | Jiao Manting
Edit | Li Huanhuan
When the auto market is cold, BAIC Motors chose to develop overseas business to “save the market.”
In the evening of March 15, BAIC Motor released Announcement states that the company has signed an equity transfer agreement with BAIC Group and intends to acquire 100% equity of BAIC International and 24.78% equity of BAIC Ruili from BAIC Group, for a total of RMB 80,593,000. After the transaction, BAIC International will become a wholly-owned subsidiary of BAIC Motor, and BAIC Ruili will become a non-wholly-owned subsidiary.
BAIC International is the general overseas business platform of BAIC Group. It is responsible for the overseas business development, production bases and sales management of BAIC Group ’s autonomous passenger cars. BAIC Ruili is mainly engaged in the design, research and development, production, sales of automobiles and their parts, Cargo import and export, technology import and export, and car leasing.
The three quarterly reports from 2017 to 2019 show that BAIC International lost 350 million yuan, 220 million yuan, and 146 million yuan respectively; during the same period, BAIC Ruili lost 23.15 million yuan, 25.43 million yuan, and 21.54 million yuan respectively.
BAIC Motor was founded in 2010. It was initiated by six companies including BAIC Group and was listed in Hong Kong in 2014. It has 4 business segments including Beijing Brand, Beijing Benz, Beijing Hyundai and Fujian Benz.
The 2018 financial report shows that Beijing Automotive’s revenue was approximately 151.92 billion yuan, a year-on-year increase of 13.2%; net profit was approximately 4.43 billion yuan, a year-on-year increase of 96.6%. In the first three quarters of 2019, BAIC Motor achieved total operating revenue of 138.03 billion yuan, an increase of 14.8% year-on-year; net profit was 3.004 billion yuan, a decrease of 21.1% year-on-year.
Given the current weakness in the domestic auto market, the growth rate of the automotive industry in major emerging market countries such as Asia, Africa, and Latin America is much higher than that of China, in the context of the globalization of the automotive industry, Beijing Automotive initiated this transaction. BAIC International and BAIC Ruili’s overseas business And experience will form synergy with BAIC’s existing business, which will help BAIC to advanceWe will take part in the competition in the main emerging markets in Asia, Africa, and Latin America, as well as the global automotive market, and take the lead in seizing the emerging markets. The transaction is conducive to optimizing BAIC’s business structure, strengthening the company’s international business share, and extending the product life cycle.
In addition, BAIC Motor does not have an independent overseas production base and sales network. By acquiring target equity, BAIC Motor can quickly obtain overseas production and sales resources. BAIC International and BAIC Ruili have good profit expectations. BAIC Motor said that the construction of the production bases of BAIC International and BAIC Ruili has been basically completed, and BAIC International’s overseas sales channels have matured. It is estimated that BAIC International and BAIC Ruili can turn around and turn around in about 3 years.
Beijing Automobile said that, in summary, in the context of the domestic passenger car market growth adjustment and the steady development of emerging economies in Asia, Africa and Latin America, this transaction provides it with a driving force for overseas business growth It is of great significance for Beijing Automotive to achieve international development.
