- Trading resumes after suspenion following Dec. 4 deal
- China's biggest car dealer buys stake amid sales slowdown
Baoxin Auto Group Ltd. jumped as much as 25 percent in Hong Kong on its first trading day since China Grand Automotive Services Co. bought a majority stake in the company for HK$8.2 billion ($1.1 billion).
Baoxin Auto, a retailer of BMW vehicles in China, traded at HK$4.97 as of 9:38 a.m., headed for the highest closing price since July 2. The benchmark Hang Seng Index fell 1.8 percent. China’s largest publicly traded car dealership group paid HK$5.99 for each share of Baoxin Auto on Dec. 4, according to a filing to the Hong Kong stock exchange.
The deal allows China Grand Auto to access Baoxin’s network as slowing growth in luxury sales prompts both premium carmakers and distributors to widen their geographic reach and appeal to more diverse demographic groups. The stake also gives the dealership group more bargaining power with automakers when negotiating financial assistance or sales targets.
China Grand Auto had as many as 454 stores at the end of June, while Baoxin Auto operated 101 outlets. China Grand Auto said 52 of its outlets are “high-end brand stores,” while Baoxin Auto has said it’s the largest dealer of BMW-brand vehicles in China, according to the filings and statements of the respective companies in August.