FUZHOU, Fujian – Dongfeng Motor Corp. (Dongfeng) is in talks with Fujian provincial government for possible restructuring of Fujian Motor Industry Group Co., Ltd. (Fujian Motor), reported auto.sohu.com, citing a source familiar with the matter.
Based on a memorandum signed in August, Dongfeng will be the first choice in company selection to restructure Fujian Motor. And after the latter is restructured, it will be put under the overall strategic development plan of Dongfeng, becoming its base for developing independent brand passenger vehicles in south part of China.
Through restructuring, Fujian Motor hopes it will be able to utilize Dongfeng’s resources to develop its passenger and commercial vehicles including its subsidiary Southeast Motor’s independent brand passenger cars, Mercedes-Benz’s high-end commercial vehicles, MPVs and SUVs. Fujian Motor also wants to have co-development opportunities with Dongfen in auto parts field after it is restructured.
In their negotiations on equity stakes, DFG has a desire to take more than 50 percent stakes to become the majority shareholder of Fujian Motor in order to get bigger decision-making power. Also, if Dongfeng can control Fujian Motor, it will help its plan to cooperate with Mercedes-Benz
As the biggest shareholder of Fujian Motor, the Fujian municipal government is reluctant to give up its vehicle arm, and Fujian Motor itself is willing to transfer only about 40 percent of its equity stakes to Dongfeng. But Dongfeng has turned down Fujian Motor’s stake proposal, said the source.
Due to the complicated equity relationships that Fujian Motor has with Yulon Motor, Mitsubishi Motor and Daimler, equity stakes will be a tough issue facing Dongfeng and Fujian Motor in their restructuring negotiations.