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GAC acquires 50 per cent of FAW Toyota

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GAC acquires 50 per cent of FAW Toyota

The Guangzhou Automobile Group (GAC) will take over the 50 percent stake in FAW Toyota currently held by FAW. The deal, which leaked about two weeks ago, has now been confirmed by all parties. Importantly, FAW Toyota is to continue operating as an independent company—for the time being, at least.

Reuters reported at the end of September, citing a stock exchange announcement from GAC, that the Chinese automaker would acquire 50 per cent of FAW Toyota through the purchase of the half of the company currently held by a subsidiary of the state-owned FAW Group in the joint venture. The transaction is to be financed through the issuance of new A-shares. At the same time, FAW is set to become the second-largest shareholder of GAC.

Toyota now states in its own announcement that FAW Toyota will remain independent, but that the joint venture will, in a later phase, form an alliance with the already existing joint venture GAC Toyota to “handle functions such as research and development, procurement, production, and sales within the joint ventures”. This alliance is intended to deepen the partnership and “further strengthen the long-term cooperative relationship among FAW, Toyota, and GAC”.

Toyota, FAW, and GAC have recently signed a framework agreement for such a strategic alliance. Based on this agreement, the companies plan to contribute assets and capital to “gradually deepen and expand their areas of cooperation through technological innovation”, as stated. This explicitly includes “efficient alliance of industrial resources”, which could, for example, involve plant utilisation at each other’s facilities.


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