China Automotive Systems To Buy Remaining Stake In Two Units In $35.2 Mln Deal

(RTTNews) - China Automotive Systems, Inc. (CAAS), a power steering components and systems supplier in China, announced Monday that it has entered into a Stock Exchange Agreement to acquire the remaining 20.0 percent minority interest in Jingzhou Henglong Automotive Parts Co., Ltd., and the remaining 19.0 percent minority interest in Shashi Jiulong Power Steering Gear Co., Ltd., from Jiulong Machinery Electricity Manufacturing Co., Ltd.

The aggregate purchase price of the acquisition will be equivalent to approximately $35.2 million. The transactions will be immediately accretive to earnings per share, the company noted.

The company will issue a total of 4.078 million new common shares of CAAS stock to Jiulong Machinery Electricity as consideration for the acquisition. The company will issue 3.26 million new shares in exchange for the 20 percent equity interest in Jingzhou Henglong, and 818,000 new shares for the 19 percent equity interest in Shashi Jiulong.

The shares will be issued in a private placement transaction that is exempt from registration with the U.S. Securities and Exchange Commission.

The net income of the two subsidiaries totaled $27.8 million in 2013.

China Automotive Systems' unit Hubei Henglong Automotive System Group Co., Ltd. currently owns the other 80.0 percent and 81.0 percent equity interests in Jingzhou Henglong and Shashi Jiulong, respectively.

China Automotive Systems expects to complete these acquisitions in the third quarter of 2014. Upon completion of these acquisitions, Jingzhou Henglong and Shashi Jiulong will become wholly owned subsidiaries of the Henglong Group.