(Yicai) May 6 -- Wanxiang Qianchao’s shares soared by their daily trading limit after the Chinese auto parts supplier unveiled a plan to acquire the overseas car parts business and related assets of Wanxiang Group, its controlling shareholder.

Wanxiang Qianchao [SHE: 000559] closed up 10 percent at CNY5.59 (77 US cents) a share in Shenzhen today. Trading in the stock had been halted since April 17.

Wanxiang Qianchao will buy all of Wanxiang America in a cash and new shares deal, the Hangzhou-based company announced yesterday. It also plan to issue new shares to as many as 35 external investors to finance the cash payment, future projects, and replenish working capital.

Both private placements are priced at CNY3.87 (53.60 US cents) a share, a 76 percent discount on the firm’s closing price of CNY5.08 on April 17.

The final value of the deal, in which Wanxiang Group will transfer its major auto parts assets in the United States and Europe -- Neapco Holdings, Wanxiang Automotive Components, and Wanxiang Automotive Components Europe -- to Wanxiang America, will be determined after the assets are audited and assessed.

Wanxiang America had an unaudited asset value of USD718 million at the end of last year and revenue of USD1.3 billion. Both were well above 50 percent of the buyer’s corresponding data for the same period, so the deal should be seen as a major asset restructuring for Wanxiang Qianchao. It also consititutes a related-party transaction as Wanxiang Qianchao’s controller owns about 60 percent of Wanxiang America.

The assets, whose clients include Ford Motor, BMW, General Motors, Stellantis, and Volkswagen Group, mainly research, develop, make, and sell core parts and components for drivetrains and steering systems. Their key R&D and production bases are in countries such as the US, Mexico, Poland, and Türkiye, with excellent layouts for globalized R&D, production, and sales.

The acquisition will help Wanxiang Qianchao better integrate into the supply-chain systems of various key vehicle manufacturers worldwide to increase its global market share, it noted.

Wanxiang Qianchao had revenue of CNY14.5 billion (USD2 billion) and net profit of CNY822 million (USD114 million) last year, up 3.4 percent and 1.5 percent, respectively, according to the annual report it released on April 30. The firm had net assets of CNY8.86 billion (USD1.23 billion) at the end of the year.

Editor: Futura Costaglione