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Volkswagen closes in on 50% stake in China partner Jianghuai

Bloomberg logoBloomberg 5/29/2020 Bloomberg News
a construction site: The assembly line of NIO ES8 electric vehicle is seen at a plant jointly built by Chinese automaker Anhui Jianghuai Automobile Group Corp., Ltd. (JAC Motors) and Chinese electric vehicle startup NIO on June 8, 2018 in Hefei, Anhui Province of China. © Photographer: VCG/Visual China Group The assembly line of NIO ES8 electric vehicle is seen at a plant jointly built by Chinese automaker Anhui Jianghuai Automobile Group Corp., Ltd. (JAC Motors) and Chinese electric vehicle startup NIO on June 8, 2018 in Hefei, Anhui Province of China.

(Bloomberg) -- Volkswagen AG is seeking a 50% stake in Chinese electric-vehicle partner Anhui Jianghuai Automobile Group Holdings Ltd., expanding its footprint as the world’s largest car market gradually recovers.

The deal is expected to be finalized by July 31, Jianghuai’s listed unit said in a stock exchange filing Friday, without disclosing value. Shares of JAC Motor, as the company is known, have almost doubled over the past month, giving it a market value of about 17 billion yuan ($2.4 billion). The stock rose 10% as of 10:33 a.m. in Shanghai.

VW is doubling down in a market that’s showing signs of revival from a slump exacerbated by the coronavirus outbreak, while vehicle demand in Europe and the U.S. continues to slump. The German company is also among the first global manufacturers to take advantage of China’s looser foreign-ownership rules for carmakers.

VW’s push follows BMW AG’s move to take control of its joint venture with Brilliance China Automotive Holdings Ltd. China’s government is following through on a pledge to open up the economy to foreign ownership, lifting a 50:50 joint-venture rule in 2018 that restricted global brands’ access to the market for decades.

JAC Motor is VW’s smallest partner in China. The German company has bigger collaborations in the country with SAIC Motor Corp. and China FAW Group Co.

The local government of Anhui province will hold the other half of the Chinese company after the deal, according to the filing. The province also works with NIO Inc., backing the electric-car maker’s $1 billion fundraising this year.

After the deal with Jianghuai, Volkswagen is set to boost its holding in the companies’ joint venture to 75%, according to the filing. The venture targets annual production capacity of as many as 400,000 vehicles in 2029.

(Updates with ownership rules in fourth paragraph.)

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