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Manganese Bronze and Geely sign JV agreement

LONDON — Manganese Bronze Holdings Plc and Zhejiang Geely Holding Group Co. Ltd. signed an agreement on October 24 to jointly produce London’s iconic black taxis in Shanghai.


We are delighted to have signed these heads of terms with Geely, (which) is one of the fastest growing car companies in China,” Tim Melville-Ross, chairman of Manganese Bronze, said earlier in October, prior to finalizing the agreement.


Geely Chairman Li Shufu also said he was excited about the deal.


This is an important agreement for Geely and we are confident that the joint venture will be a success,” he added.


The £53 million (¥786.75 million) partnership, to which Manganese Bronze is contributing £19.85 million (¥294.77 million), will have an initial production capacity of 20,000 vehicles per year. Geely will hold 51 percent of the JV, its subsidiary Shanghai Maple will take 1 percent, and Manganese Bronze will control 48 percent. Approximately £9.0 million will used for land purchases, and roughly £5.6 million has been earmarked for intellectual property development.


Production is planned to commence in mid-2008,” Manganese Bronze Holdings Plc. Finance and Business Development Director Mark Fryer told CBU/CAR over email.


We believe the Chinese market will be the largest market. The taxi parc in China is over one million vehicles. We have historically exported out of the U.K. in small numbers, but to over 50 countries throughout the world. With a lower-cost London taxi, the volumes to these markets will grow significantly.”


The two companies first announced their plans to collaborate with each other in early October.


(Regulatory approval will take) six months as a minimum and 12 months maximum to complete durability testing,” said Fryer.


Geely subsidiary Shanghai Maple will handle final assembly and sales throughout Asia. Manganese Bronze will hold the sales rights for other global markets, license its IPR for the JV, and issue 5.7 million new ordinary shares to Geely. This represents 23.0 percent of Manganese Bronze’s enlarged issued ordinary share capital, based on a valuation of £2.50 per share.


Manganese Bronze has been expanding internationally through low-cost manufacturing partners in countries with sizeable and rapidly growing vehicle markets, such as China, Russia, Mexico and India, Fryer told CBU/CAR. Geely proved particularly attractive as a potential partner.


(Geely has) low costs, a strong reputation, excellent facilities, automotive licences, export capability, great people and it is well-funded,” said Fryer.


(It has) all-Chinese intellectual property rights and manufactures its own engines and transmissions.”

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