Automotive News

GEELY Automobile Holdings Ltd, the listed unit of China's largest privately owned car maker, may complete the HK$1.1 billion (US$141 million) acquisition of stakes in five auto making ventures from its founder by the end of June.

"If there are no hitches, it should be done next month," Geely Chairman Li Shufu told reporters in Hong Kong yesterday.

The company plans to issue 1.26 billion new shares to Li to pay for the stakes. The value of the deal was calculated based on Wednesday's closing share price.

The maker of Free Cruiser compacts follows SAIC Motor Corp in receiving assets from its parent as Chinese car makers tap capital markets to fund expansion amid booming demand, Bloomberg News said. China's vehicle sales have tripled during the past five years as economic growth has made cars affordable to more people.

The deal will raise Geely's stakes in the ventures, which make Geely cars, to as much as 90 percent, the Hong Kong-based company said in a July 2007 statement. The new shares will boost Li's stake in Geely to 59 percent from 49 percent, it added.

Geely fell 1.1 percent to close at 90 HK cents in Hong Kong trading. The benchmark Hang Seng Index lost 1.6 percent.