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Rumors about FAW and Dongfeng Merger Spreads in China

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Published on : May 06, 2015

According to the sources, there are a lot of rumors circulation in the whole nation about the merger of top Chinese automobile manufacturers FAW and Dongfeng. The China Daily has informed on Tuesday that the news of an executive shift resulted in a raise of 10% in terms of everyday limit, in the shares of both the companies, which further initiated a temporary halt in the trading of share of these companies.

A merger between the listed subsidiaries of Dongfeng and FAW, which is China’s second and third biggest automotive companies, will result in a complex web of joint ventures that will involve some of the key global automobile manufacturers such as Nissan, General Motors, Audi, and Honda. China’s ruling Communists are looking for new mergers and acquisitions of some of the state-owned companies so as to make them more competitive across the globe.

On Tuesday, Reuters further stated that the parent company of Dongfeng Automobile, Dongfeng Motor Corporation, gave a halt for trading its listed subsidiary in order to check with the Chinese authorities regarding this rumor. Both these parent companies are state-owned. FAW stated the halt in the trading was to determine if the investors were trading on the insider information. The Financial Times stated that the Dongfeng Motor Group, which is the Hong Kong-listed subsidiary, was taking all the rumors very seriously; however, they had not yet receive any information from the government authorities.

Further, on Tuesday Dongfeng Motor gave a confirmation that their chairman, Xu Ping, will be soon holding the same position in FAW Group. Dongfeng’s chairmanship will be taken by ZHU Yanfeng, who is a state bureaucrat and also a veteran of the automobile industry deal making in China.