Chery Rebuffs Report of Share Sale to Baoneng Investment
Xu Wei
/SOURCE : Yicai
Chery Rebuffs Report of Share Sale to Baoneng Investment

(Yicai Global) May 16 -- Reports that Shenzhen Baoneng Investment Group Co. will take a stake in Chery Automobile Co. are untrue, business news website Tencent Yixian quoted Zhao Huan, assistant to the general manager of Chery and executive deputy general manager of its marketing arm, as saying today.

Online media outlet Auto News Agency reported earlier that Baoneng was planning to partake in Chery's capital raising and share-offering program and buy its shares for CNY25 billion (USD3.9 billion) to CNY27 billion to become its biggest shareholder, with the announcement likely as early as next month of the deal, which would turn state-controlled Chery into a private company, per the report.

Baoneng and Chery had earlier business connections. Baoneng bought a 51 percent stake in Qoros Automotive Co. for CNY6.5 billion last December. Chery and Quantum (2007) LLC formed Qoros in 2007, with initial registered capital of CNY3.4 billion. Chery and Quantum upped their investments in Qoros in 2009, with both taking a 50-percent stake.

Chery and Quantum's share would thus fall to 25 percent and 24 percent, respectively, after any capital injection by Baoneng.

Chery has denied the report, but Baoneng Automobile Co., a Baoneng affiliate, has not responded to Tencent Yixian's requests for comment.

State-backed enterprises must undergo relevant auction processes for nationally-owned assets if they want to sell shares, per Chinese law.

The uncertainty lingers.

Editor: Ben Armour

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Keywords: Chery Automobile , Baoneng Group , M&A Fund