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Chang’an sells 50 percent stake in Chang’an PSA to Baoneng subsidiary

CHONGQING – Chang’an Automobile Co., Ltd. has sold its 50 percent stake in Chang’an PSA, its joint venture with Groupe PSA, to a unit of Baoneng Group for ¥1.63 billion, according to a statement released by the domestic-listed automaker, China’s sixth largest, on December 31.

Chang’an and Shenzhen Qianhai Ruizhi Investment Co., Ltd., a fully owned subsidiary of Baoneng Automobile Co., Ltd., signed the equity transfer agreement on December 30. An initial payment of ¥831.3 million, equal to 51 percent of the transfer price, was already paid on the same day per the agreement.

The deal comes a month after a statement was posted on the Chongqing Assets & Equity Exchange on November 29 that Chang’an was seeking to offload its 50 percent stake for a minimum of ¥1.63 billion. The previous day, a spokesperson with Groupe PSA confirmed that the French automaker was also planning to sell its 50 percent stake in the JV, which was officially formed in November 2011 to produce and sell the high-end DS brand.

For the time being, the Chang’an PSA JV has become a Baoneng PSA JV, pending what happens with the 50 percent stake from Groupe PSA.

Chang’an said in the statement the sale was to resolve the issue of Chang’an PSA’s survival and get rid of loss-making assets and that Baoneng Automobile’s deep pockets and strong will to enter the auto industry is conducive in taking care of Chang’an PSA’s problems. The sale has already received approval from Groupe PSA but requires approval from shareholders as well as relevant national and local authorities.

The latest data shows that Chang’an PSA sold just 2,000 vehicles in the first nine months of 2019, achieving revenues of ¥812 million but racking up losses of ¥2.23 billion. The previous year, it had revenues of ¥915 million but lost ¥874 million. As of the end of September 30, 2019, it had total assets of ¥6.3 billion and liabilities of ¥6.82 billion, resulting in net assets of -¥519.2 million.

The DS brand will continue to be produced at Chang’an PSA’s production facility in Shenzhen, Guangdong Province following the Baoneng takeover.

Baoneng Group, a leading conglomerate engaged in high-end manufacturing, international logistics, comprehensive development and civilian services, acquired a 51 percent stake in Qoros Automotive, Chery’s JV with Israel Corp., back in 2017. It now holds a 63 percent stake in that JV after recently acquiring a 12 percent stake in that JV from Israeli partner Kenon Holdings. Baoneng had been a frontrunner to acquire the 50 percent stake in Chang’an PSA from Chang’an.

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