UCAR to acquire 14.54% of CAR Inc. for RMB 1.917 billion
China’s chauffeured car service provider UCAR announced its plan to buy 318 million shares of CAR Inc., a provider of car rental services, for HK$ 2.262 billion (RMB 1.917 billion).
China’s chauffeured car service provider UCAR announced on October 26 its plan to buy 318 million shares of CAR Inc., a provider of car rental services. The deal is valued at HK$ 2.262 billion at HK$ 7.12 per share, equivalent to RMB 1.917 billion based on the exchange rate on October 20, a day before the share transfer agreement was signed. CAR Inc. shares closed at HK$ 7.08 per share on October 26.
UCAR is using a specially incorporated branch of its wholly-owned subsidiary Shenzhou Car Bank as the buyer.
CAR Inc. generated RMB 6.45 billion in total revenue in 2016, an increase of 29% from RMB 5 billion in 2015. Net profit was RMB 1.46 billion in 2016, up 14% compared with RMB 1.401 billion in 2015.
In the first half of 2017, UCAR’s operating income increased by 91.27% to RMB 44.45 billion, and the reported loss of RMB 460 million was 80.61% lower year on year.
The acquisition is significant for UCAR, as UCAR enjoys high valuation and substantial working capital, while Hong Kong-listed CAR Inc. is a highly profitable platform. When the acquisition is completed, the prospect for UCAR to achieve profitability this year, augmented by the revenue of CAR Inc., will be more certain.
The acquisition will help UCAR expand business across the auto industry chain, achieve synergetic development and enhance competitiveness by integrating resources of both companies.