SHANGHAI – SAIC Motor Corp. announced on May 25 that it will agree to GM buying back 1 percent stake of Shanghai-GM, their joint venture in China, at a price of $91.4 million.
This would bring the venture back to a 50:50 split for operations in China.
The announcement said the buyback deal is based on an agreement for the transfer of the 1 percent stake of Shanghai-GM signed by SAIC and GM China in 2009, when SAIC spent $84.5 million purchasing the stake of Shanghai-GM from GM China. At that time, the U.S. automaker just went through bankruptcy and reorganization due to the financial crisis. The earlier purchase had changed the ownership proportions of the JV to 51:49 from 50:50.
In January during the Detroit auto show, GM CEO Dan Akerson said he hoped to wrap up the buyback of the 1 percent share from SAIC “in the coming months.”
When the buyback is completed, the board of Shanghai-GM will get a new director from GM, ensuring the proportion of seats on the JV’s board will go to 6:6 from the current 6:5.
In addition, the buyback deal, based on the 2009 agreement, will also not influence the combination of Shanghai-GM’s sales revenues for SAIC.
Currently, the repurchasing deal between SAIC and GM China is awaiting approval by the Shanghai Municipal Commission of Commerce.