[NEW YORK] Dongfeng Motor Group plans to withdraw its Hong Kong shares in a new twist on a long-awaited restructuring, part of a transaction that will result in a new stock listing for its Voyah line of luxury new-energy vehicles.
Dongfeng’s H shareholders will receive HK$6.68 in cash and 0.3552608 Voyah H shares for each share they currently own, according to a filing on Friday (Aug 22). The aggregate theoretical value of the transaction is about HK$10.85 per share, well above the HK$5.97 value of the shares when trading was suspended earlier this month.
The move comes after China’s State Council signalled its support in March for potential overhauls of three major state-owned automakers, including Dongfeng Motor, to consolidate the industry and boost competitiveness.
The Wuhan-based carmaker earlier on Friday reported a 92 per cent drop in net income for the first half of the year.
Dongfeng has pledged to restructure as it struggles to compete in the country’s increasingly competitive car market. Many legacy brands have lost ground to the likes of BYD, now China’s top-selling car brand, while squeezing out companies that cannot keep up with the technology-heavy offerings popular with drivers.
Voyah has been a bright spot for Dongfeng, which launched the electric vehicle (EV) brand in 2020, with its sales up 88 per cent in the first seven months of the year.
About half of Dongfeng’s total sales to July came from largely gas-powered vehicles manufactured by its two joint ventures, one with Honda Motor and another with Nissan Motor. The Chinese company announced plans earlier this month to divest its 50 per cent stake in a petrol engine tie-up with Honda.
Dongfeng and another state-owned carmaker, Chongqing Changan Automobile, were said to be in talks about a potential merger, The New York Times reported in April. But in July, a new government entity became the controlling shareholder of Changan, making it one of three automakers directly controlled by Beijing, along with Dongfeng and FAW Group. BLOOMBERG
