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Despite the central policy support and the signing of the framework agreement as early as half a year ago, there are various indications that the Fujian Auto Group Industrial Group (“Fuqiâ€) plan for integrating Dongfeng’s third-tier echelon in China’s second-largest automobile group has no outside imagination. It goes well.
Last week, sources from Dongfeng Group stated that at present Dongfeng has completed a comprehensive due diligence on the entire Fuqi Group and its affiliated companies. The investigators have withdrawn and will present the final investigation and assessment report after the Lunar New Year. The content of this report will determine whether Dongfeng will accelerate the pace of reorganization of the entire Fuqi Group, such as how to give consideration for the acquisition of the equity of Fuqi Group, as well as the entry into Dongfang Automobile, a joint venture entity of Fuqi Automobile.
As of now, the expected Dongfeng restructuring of the Fuqi Opera has only staged an opening performance, that is, Dongfeng indirectly controlled the Southeast Motor by means of equity restructuring.
Whether Dongfeng can integrate Fuqi through the “springboard†in the southeast is not clear. On the one hand, Dongfeng’s due diligence on Fuqi doubled than expected for three months, showing that Fuqi’s assets are far more complex than Dongfeng’s expectations; on the other hand, Fuzhou has launched a “New Dragon Horse†with a multi-billion-dollar investment. The passenger car project is also seen as a key measure in the unwillingness to “sit still†or increase the bargaining chips for future restructuring.
As of the time of the press release, Dongfeng Group officials are still reluctant to comment on whether or not they can successfully restructure the blessing, and have not issued a reorganization schedule. Lian Xiaoqiang, Chairman of Fuzhou Automobile Group, recently confirmed in the public position before the media that Dongfeng’s restructuring of Fuqi is still at the “negotiation†stage. The implication is that even though governments from the central government to the local level have all supported this cross-regional restructuring, the parties have not completely coped with each other on many key issues involving vital interests.
Fuqi "two hands to prepare"
Although the reorganization with central banks such as Dongfeng could provide a blessing to the economically disadvantaged Fuqi Group, the latter did not place all hopes on this cross-regional restructuring.
“Dongfeng and Fuqi are still in the stage of talking about emotions, and we think it is better to have a deeper discussion. It is better to have a combination of the two sides. Just like to fall in love, the more talked about feelings, the more you talk about the problems at once. It is also possible to get married the next day, but we are still talking about the emotional stage.†On January 8th, at the listing ceremony of Fujian Xinlongma’s first micro-passenger product “Qiteng M70†affiliated with Fuqi, Fujian Automobile Director Chang Lian Xiaoqiang made the above statement.
If we just use the word “translate†directly, at least the two conditions of Dongfeng’s reorganization of the blessing are reflected: First, Dongfeng’s restructuring of the blessing is still at the negotiating stage. Second, there are still many issues that the two sides have not been convinced about. According to external analysis, the uncertainty about reorganizing the future is one of the key reasons that Fuqi has decided to launch the “New Dragon Horse†passenger car project under the premise of insufficient funds.
Fuzhou Xinlongma is called Fujian New Longma Automobile Co., Ltd. and is a direct holding company of Fujian Automobile Industry Group Co., Ltd.
According to public information, Fuqi Xinlongma was jointly established by Fuqi Group and Longyan Municipal Government with a total investment of RMB 2.0275 billion. It has a complete independent brand development system including independent vehicle R&D and design, engine manufacturing, and vehicle manufacturing. The company has three core projects with an annual output of 300,000 complete vehicles, an annual output of 300,000 engines, and an automotive R&D center. According to the plan, the new Ryoma will use micro-customers as an entry point, and gradually develop market segments such as MPV, SUV, and family cars.
This is the fourth business segment opened by Fuqi outside Southeast Automotive, Fujian Mercedes-Benz and Jinlong Bus. The key point distinguishing it from the other three businesses is that the entire project is under the control of Fuqi. At the launch of the Qiten M70, Lian Xiaoqiang could not restrain himself with excitement: "Fuqi finally has its own base."
It was reported that Dongfeng Group had given advice on Fuqi Automobile's launch of the new Longmax vehicle and engine project, taking into account Dongfeng’s commitment to build an engine project with an annual output of 600,000 units in Fuzhou. To avoid repeated construction, it is hoped that the new Longma can Suspended the engine project, but similar proposals have not been adopted by Fuqi, because according to the NDRC's new vehicle project threshold, engine support is indispensable. Moreover, before the Dongfeng made the above proposal, the National Development and Reform Commission has approved the new Longma vehicle and engine project.
The new Longma 300,000 engine project signed an agreement in May 2011 and was jointly constructed by New Longma and Liuzhou Wuling Liuji. The total investment is approximately RMB 1.54 billion. In December of that year, the new Ryoma Engine Project held a groundbreaking ceremony.
In August 2012, the National Development and Reform Commission officially approved the production of mini-buses and engines for Fujian New Longma Motor Co., Ltd. across product categories. Although Dongfeng and Fuzhou had reported the news of the restructuring plan as early as June 2011, they actually signed a framework cooperation agreement with the Fujian provincial government, but they waited until two years later in May 2013. In the framework agreement, it is clear that Dongfeng has committed to build a project with an annual output of 600,000 engines in Fuzhou, Fujian Province.
Dongfeng "step by step to see two steps"
Seeing that Dongfeng entered the main plate of Fuqi Automobile, the southeast automobile date is near. Fuqi also began to step up the cultivation of the “New Dragon Horseâ€, the only reserved area for passenger cars, and did not scruple on the strategic layout of Dongfeng’s future. This is considered to be Fuqi’s hope. In the future, in the negotiations with Dongfeng or in the game to win more weight performance. Lian Xiaoqiang even said loudly at the launch of the new Ryoma on January 8th: “We are determined to have a truly independent manufacturing base for our brand.â€
In addition to the newly opened wholly-owned subsidiary of New Dragon Horse, Fuqi has a total of four major segments, and the remaining three are: a joint venture with Southeast Asian Automobiles, Fuzhou Automotive and Daimler, a joint venture between Japan’s Mitsubishi Motors and the Taiwan Yulon Group’s China Automotive Tripartite. Project Fujian Mercedes-Benz, Xiamen Jinlong Automobile Group (referred to as Xiamen Jinlong). The first two companies are joint ventures. In addition to the poor operating conditions in recent years, Fuqi is unable to make joint ventures, and Xiamen Jinlong's largest shareholder has also become the Haiyi Group under Xiamen's SASAC.
Now, what Dongfeng really “eats†is only Fuzhou’s three-way joint venture vehicle company, Southeast Automotive. The latter is also able to make its way through Taiwan’s Yulon, who had a long history of cooperation with Dongfeng. Dongfeng is not willing to give a clear plan and timetable for how to comprehensively reorganize other sections of Fuqi. "The due diligence has now been completed, but the report has not yet come out. The next step in the reorganization plan should be based on the report."
On May 16, 2013, after nearly one year of sawn-type negotiations, Zhu Fushou, general manager of Dongfeng Motor, signed a framework agreement with the Fujian Provincial Government on matters including Dongfeng’s capital increase in Fuqi and the joint venture with Fuqi to establish an investment company to hold Southeast Automotive. Dongfeng will become the second largest shareholder of Fuqi outside the Fujian Provincial SASAC, and indirectly become the major shareholder and actual controller of Southeast Automotive.
In the aforesaid framework agreement, Dongfeng Motor Co., Ltd. will acquire 45% equity interest in Fuqi held by Fujian Provincial SASAC in a capital increase manner. In addition, Dongfeng Motor Co., Ltd. and Fuzhou Automobile Group will form Southeast Asia (Fujian) Automobile Industry Co., Ltd. (referred to as Southeast Automotive) in the form of an investment company, in which Dongfeng holds 2/3 of the shares of the investment company and Fuqi holds 1/3 of the shares. .
Judging from the contents of the signed framework agreement, Dongfeng plans to take a 45% stake in Fuqi, but it will not directly participate in Fujian Benz, Xiamen Jinlong and Xinlongma, but will only take over Southeast Automotive.
According to informed sources close to the Dongfeng Group's senior sources, Dongfeng's acquisition of Fugas will follow a step-by-step strategy. The above-mentioned agreement mentioned in the framework agreement is only the first step of Dongfeng's acquisition of Fuqi. Can Dongfeng take the second step - a comprehensive acquisition? Fuqi will depend on Dongfeng’s business status after taking over Southeastern Auto. Prior to this, Dongfeng was required to complete the due diligence on the entire business of Fuqi and obtain an investigation and evaluation report, and based on this report, signed an equity transfer and capital increase agreement with Fuzhou Automobile.
The reporter learned from the inside of the Dongfeng Group that a Dongfeng survey team with a scale of dozens of people has entered the Fuqi Group since the signing of the framework agreement. According to the best expectations of the signing of the framework agreement in mid-May, due diligence, including financial audits and property assessments, will be completed within three months. That is, the investigation will be completed in August last year. The Group signed specific equity transfer and capital increase agreements in accordance with the previously signed framework agreement.
However, due to the due diligence that was originally scheduled to be completed within three months, it actually took Dongfeng seven months to infer that Dongfeng’s due diligence on Fuqi was not as smooth as originally envisaged. Due to due diligence has only just been completed, and relevant persons of Dongfeng Group confirmed that it will wait for the Lunar New Year to draw the results of due diligence and asset assessment. This survey result will determine to a certain extent how Dongfeng’s reorganization of Fuzhou’s 2014 drama continues. Staged.
Unpredictable variables
The 7-month due diligence reflected Dongfeng’s careful handling of the acquisition. Since the reorganization with Jiangsu Yueda and South Korea's Hyundai Kia in 2002, Dongfeng Motors has few moves to merge and restructure. The current chairman of Dongfeng Motor Xu Ping has been conducting all aspects of Dongfeng's work since 2005. His consistent low-key and robust style has also become the style of Dongfeng's actions.
In particular, after the failure to invest 2 billion yuan to participate in Hafei in 2008, the Dongfeng decision-making layer headed by Xu Ping was more conservative and cautious in its attitude towards mergers and acquisitions. The rumors of the acquisition of Fuqi continued for nearly two years before its release, and the investigation of the acquisition of PSA has been launched for more than six months and has remained at the “wait and see†stage. Dongfeng’s cautious attitude in carrying out foreign cooperation is evident.
Earlier it was reported that as the key personnel appointed to the southeast, the new general manager of Southeast Automotive will be dispatched by Dongfeng. In addition, Dongfeng will also dispatch more than 30 people to the key management positions of Southeast Automotive. According to insiders from Dongfeng, currently Dongfeng has been selecting candidates for assignment, and some of the executives have come from due diligence team members. The team stationed in the southeast will be further confirmed after the survey report in the first quarter of this year.
Taking into account the extremely complex equity relationship between Fuqi and its subordinates, it is particularly critical for Dongfeng to write down his due diligence report.
“The most crucial cooperation between Dongfeng and Fuqi is in Southeast Automotive, but there is also a communication process. Cooperation with other business segments of Fuqi involves shareholders' wishes. At present, we have not discussed yet. The object of our first step cooperation is still mainly In the southeast of this block.†The above statement by Lian Xiaoqiang means that the current issue of the reorganization of Dongfeng and Fuqi remains at the Southeast Automotive level.
With regard to the promotion of restructuring at this level, Lian Xiaoqiang disclosed to the media that related cooperation negotiations have entered the technical level. “To support joint development, we cannot rely on an empty concept. We must determine what the future development strategy is and what the product is. What are the key components, these are very specific things."
In the negotiations involving vital interests, Fuqi is not willing to accept the fate of being "reorganized." With the expansion of the scope of cooperation, the negotiation game between Dongfeng and Fuqi will be more intense than expected.
"The Dongfeng cooperates with us, not we can not, Dongfeng to help us, but because we need Dongfeng, Dongfeng also needs us," Lim Xiaoqiang emphasized that Dongfeng and Fuqi are not who to reorganize, but to cooperate with each other.
“For Dongfeng, the next most important thing is to consider whether this investment can achieve the desired return.†Zhong Shi, a renowned car commentator, believes that in order to obtain greater benefits in the restructuring process led by the local government, Fujian Province The government will naturally request reorganization methods, equity allocations, subscription prices, etc. This depends on Dongfeng’s belief that the “sales†value is not worth doing.