Meidong Automobile (01268) intends to acquire Chasing Star Automobile Sales Group for 3.7 billion yuan

Meidong Automobile (01268) announced that on December 13, 2021, the company intends to acquire all the issued shares of Chasing Star Automobile Sales Group Co., Ltd. from Wearnes-StarChase Limited for a total cash consideration of RMB3.7 billion (net of any delivery difference).

As at the date of the Acquisition Agreement, the Target Group owns distribution brands other than Porsche and such companies operating other distribution brands are not included in the scope of the acquisition and, therefore, such companies operating other distribution brands will be divested from the Target Group through reorganization.

Under the takeover agreement, the seller is required to restructure before the proposed acquisition is completed, according to which six companies will be disposed of and stripped from the target group. The restructuring of the target company must be completed within 12 weeks from the date of the acquisition agreement (or a later date as may be agreed in writing by the seller and the company) and the relevant restructuring should be completed prior to closing.

It is reported that the target group is a group of car dealerships located in China, operating the car brand Porsche. It has 7 4S car dealerships, 4 exhibition centers and 3 service centers in seven cities in China (namely Nanjing, Qingdao, Tianjin, Chongqing, Weifang, Jinan and Zhengzhou), with a total of 14 business sites. Each target group's dealerships are 4S auto dealerships, combining four main automotive-related businesses, namely sales, parts, after-sales service and research. It offers a wide range of sales and services, including the sale of new cars; After-sales service, including maintenance and repair and sale of parts and accessories; and auto agency services, including auto finance, insurance and registered agency services.

The announcement said that the proposed acquisition is in line with the Group's operational strategy to improve efficiency. The proposed acquisition will significantly increase the Group's new car sales and expand the Group's existing customer reach. The proposed acquisition will strengthen the Group's market position in the Porsche brand in China, which the Directors believe will benefit from the transformational changes in the automotive industry. The proposed acquisition is also in line with the Group's expansion strategy, with the target Group's dealer network complementing the Group's existing network and creating synergies.