HONG KONG (Reuters) -Shares of Chinese state-owned automaker Dongfeng Motor Group surged 69.2% as they resumed trade on Monday, after the company’s parent said on Friday it planned to take the automaker private at a premium.
The stock opened at HK$10.10 ($1.29) per share, the highest since November 2017, before trimming gains later to trade at HK$9.25, still up 54.9%. It was the biggest percentage gainer on the Hang Seng Automotive Index, which rose 1.7%.
The broader Hang Seng Index was up 1.2%.
Dongfeng Motor Corp, the parent, said it would take Dongfeng Motor Group private in a deal valued at HK$55.13 billion ($7.06 billion), while separately listing its electric vehicle arm, Voyah, in Hong Kong.
Under the deal, Dongfeng Motor Corp will pay HK$6.68 per share, representing an 11.9% premium to Dongfeng Motor Group’s last close on August 8 before trading on the stock was halted.
The move to privatise comes as China’s automakers are locked in a bruising, years-long price war that has raised costs and squeezed margins. Regulators in Beijing have recently stepped up scrutiny of the intense competition.
In February, shares in Dongfeng Motor Group surged more than 80% after it said its parent was planning a restructuring, fuelling speculation of consolidation among state-owned automakers.
($1 = 7.8140 Hong Kong dollars)
(Reporting by Hong Kong newsroom; Editing by Himani Sarkar)
