Geely may take control of Manganese

Geely's Hong Kong-listed unit may raise its stake in the company to 51 percent from 19.9 percent by buying new shares at 70 pence apiece, Mark Fryer, Manganese's finance director, said in an interview. The Coventry, England-based automaker, which would raise about 14 million pounds (US$21.5 million) from the share sale, will spearhead Geely's plans to sell its own saloon cars in Europe, he said.

“Our future will be both as a manufacturer of black cabs in Coventry, although more of the parts will be coming from China, and an assembler and distributor for Geely vehicles,” Fryer said Wednesday.

Zhang Xiaodong, a Hangzhou, China-based spokesman for Zhejiang Geely Holding Group, referred questions to the Hong Kong-listed unit, Geely Automobile Holdings Ltd. Lawrence Ang, an executive director at the unit, didn't immediately answer calls to his office and mobile phones. His assistant, Daniel Dai, declined to comment.

Manganese's LTI Vehicles unit and its predecessor companies have made cabs for the London market since 1948, according to LTI's Web site. Geely in early 2009 began manufacturing black cabs in Shanghai for the Asian market, as well as parts for the U.K. company's Coventry plant, under a joint-venture agreement.

Geely Auto rose 3.5 percent to close at HK$4.16 in Hong Kong trading. The shares have declined 1.9 percent this year.

“It is a reasonable move, but whether Geely can gain from the deal will depend on the sales volume,” said Ricon Xia, an analyst at Daiwa Institute of Research in Hong Kong.

In a statement Wednesday, Manganese said parts for its TX4 vehicles will be made in Shanghai, in a move that would eliminate about 60 jobs at its Coventry plant.

Chinese Premier Wen Jiabao is encouraging companies in the world's third-largest economy to acquire technology and take on foreign rivals. Geely unveiled the Emgrand, its first homegrown model specifically designed for Western markets, in December and is seeking to use Manganese as its European distributor.

Shanghai-based SAIC Motor Corp. paid US$116 million for the design rights to MG Rover Group Ltd.'s Rover 25 and 75 cars in 2005 and became the owner of MG's plant in Birmingham, England, after a 2007 merger with Nanjing Automobile Group Corp.

Some previous attempts by Chinese automakers to expand overseas failed. Sichuan Tengzhong Heavy Industrial Machinery Co. said last month its purchase of General Motors Co.' Hummer brand was blocked by Chinese regulators as the gasoline-guzzling vehicles didn't fit the government's energy efficiency policy.

Subscribe to The China Post and save 25%. Click here

SharePrintEmail

Write a Comment

Terms

Enter your comments - 3000 characters max

Type in image code

Submit

 Receive China Post promos
 Respond to this email