Dongfeng restructuring Fuqi two steps

“Our negotiations with Fuqi continue. We will sign the contract at the end of the year.” Yesterday, a senior executive of Dongfeng Company stated on the phone. A senior group of Fuqi Group also confirmed the news and indicated that it is possible to sign a contract in November. The reorganization plan is divided into two steps.

In July 2011, Dongfeng Motor Company prepared to reorganize Fujian Automobile Industry Group Co., Ltd. (hereinafter referred to as "FuChang"). If this turns out to be a reality, it will be Dongfeng Group's largest domestic reorganization event in the past two decades.

"Two-step" program <br> <br> Dongfeng Fu steam restructuring launched in July this year, negotiating for the government of Fujian Province. Dongfeng Motor Chairman Xu Ping, General Manager Zhu Fushou, Deputy General Manager Zhou Wenjie and others held talks with senior officials of the Fujian government in Wuhan and reached preliminary intentions. At the end of August, the Fujian Provincial Government and Dongfeng Corporation held strategic cooperation framework agreement talks. They plan to sign a strategic cooperation framework agreement on September 17 but suspended the signing of the agreement for some reason.

However, Dongfeng’s top executive stated that the suspension of the signing of the agreement does not mean that the negotiations will be suspended. The negotiation between the company and Fuqi is still ongoing and it plans to sign a framework agreement with the Fujian provincial government during the year.

According to senior figures from Fuqi Group, the reorganization plan was divided into two steps: the first phase, Dongfeng Corporation's acquisition of 40% shares in FuChang; the second phase, when Dongfeng's acquisition of Fuzhou Automobile's annual sales volume reached 300,000, Dongfeng re-acquired blessings. 20% of the company's shares, becoming a controlling shareholder.

Fuqi Group's middle management team also circulated that during the initial period of acquisition, Dongfeng will deploy a 30-person management team to participate in the management of Fuqi and manage the position of Fuqi General Manager. However, this information has not received a positive response from Fuqi Group.

The news of Fuqi's reorganization has continued to appear since 2008, and Beiqi, Guangzhou Automobile and Dongfeng have emerged one after another. In 2009, BAIC and Fuzhou signed an agreement to acquire 40% equity of Fujian Benz. In 2010, GAC Group and Fuqi also reported news of restructuring, but none of them has become a reality. Fu Motors did not disclose the reasons for the failure of the two restructurings, but some organizations believe that local governments want to maximize their benefits and intervene.

According to the "Twelfth Five-Year Plan for National Economic and Social Development of Fujian Province" in 2011, the local government encouraged Fuqi to participate in the cooperation of large enterprises at home and abroad, and to expand the expansion of central enterprises. Compared with Beiqi and Guangzhou Automobile Group, Dongfeng has the obvious advantage as the only central enterprise in the contact enterprise.

Take what you need

Dongfeng’s restructuring of Fuqi is related to the policy background of the Chinese automobile industry. On July 25 this year, the Ministry of Industry and Information Technology issued the “Notice of the Ministry of Industry and Information Technology on Establishing the Exit Mechanism of the Auto Industry” to promote the restructuring of the domestic auto industry.

The respective needs of the two companies are another reason for this reorganization. Dongfeng Motor Co., Ltd. is the second largest automotive group in China with an annual sales volume of more than 3 million vehicles. Its self-operated commercial vehicle business has been a leader in China and has established joint-venture vehicles with Nissan, Honda, Peugeot Citroen, Taiwan Yulon and Kia Motors. The company, but its self-operated passenger vehicle business started late and is developing slowly. Integration of Fuqi's Southeast Motors is in line with Dongfeng's development of a "large autonomous" passenger vehicle strategy. Fuzhou's Mercedes-Benz business segment can fill Dongfeng's gap in the luxury passenger vehicle segment. Southeast Mitsubishi's presence also adds a joint venture to Dongfeng Group. Possibilities.

Fuzhou Automobile Group is located in Fuzhou, Fujian Province, with a total fixed assets of more than 2 billion yuan. It owns more than ten wholly-owned, equity-holding, and holding companies, including Southeast Auto. Fu Qiang, chairman of Fuqiang, once said that the reorganization by Dongfeng "can only be a strong cooperation, who will not be who merges."

Balancing shareholders' equity

The industry previously speculated that the dissatisfaction of Mitsubishi Motors was the reason for the signing of Dongfeng Fuhua's contraction. The company owns about 27% of Southeast Motor's shares. However, Dongfeng and Fuqi senior officials have denied this. Dongfeng executives stated that the object of negotiations for the restructuring of Fuqi has always been the Fujian provincial government. Therefore, the acquisition was carried out from the top down, and there was no problem with the obstruction of the small shareholders of Fuqi Subsidiary.

However, the complex shareholders' equity of Fuqi Group is evident. Take Southeast Automotive as an example. The original shareholders include Fuqi, Mitsubishi and Taiwan Zhonghua. According to the initial purchase ratio, the equity of Southeast Auto will become 30% for Fuqi, 20% for Dongfeng, 27% for Mitsubishi, and 23% for China. Four-way joint venture mode. The reorganization plan also involves the interests of related parties such as Daimler-Benz, Mitsubishi and China. The equity relationship and balance of interests are extremely complicated.

In addition, the internal complex operating relationships formed by Southeast Automotive history also need to be revisited. Southeast Auto's own brand and Mitsubishi brand originate from Mitsubishi's technology. Its production organizations such as parts suppliers are mainly controlled by Taiwanese companies, and marketing is sub-net sales, but in practice, it is often two. The same-store sales of the brand formed a complex internal operating relationship.

Most importantly, the Fuqi New Longma project has just started, and Southeast Automotive sales are relatively low. Apart from providing business growth opportunities and injecting funds for Fuqi and its business segment, Dongfeng Motor also needs to transfuse its technology and products.