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Wonder gains greater access into auto safety and electronic systems market
(Xinhua)
Updated: 2010-01-22 15:24
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Chinese auto parts maker Wonder Auto Technology Inc has gained greater access into auto safety and electronic systems market after it purchased a majority stake in a company which owns Jinsheng Automotive Safety Technology Holdings Ltd.
The NASDAQ-listed Wonder Auto announced on Wednesday that it has bought over 38 percent of the shares of Applaud Group Limited, which controls Jinheng Automotive.
The purchase will allow Wonder Auto greater access to Jinheng Automotive's technology.
The stock acquisition was made through two deals.
First, Wonder Auto's wholly-owned subsidiary Wonder Auto Limited (Wonder BVI) entered into an equity transfer deal with Novophalt (China) Limited, a British Virgin Islands corporation.
Under the deal, Wonder BVI will purchase from Novophalt its ownership of 20.9 percent of Applaud.
Secondly, Wonder Auto's other wholly-owned subsidiary Yearcity Limited closed a similar acquisition deal with Wonder Employee Capital Limited (WECL), a British Virgin Islands corporation.
Under the deal, Yearcity will purchase from WECL its ownership of 17.46 percent of Applaud.
Applaud, a firm registered in the British Virgin Islands, has no assets other than its ownership of 52.2 percent of equities in Jinheng Automotive.
Altogether, Wonder Auto bought 38.36 percent of Applaud and thereby owns 20.02 percent of Jinheng.
The deals are "strategically significant", because Jinheng has remarkable competitive edges in passive safety restraint system products such as airbag and seatbelt, said Meirong Yuan, chief finance officer of Wonder Auto.
With an increasingly mature auto industry and a growing demand for auto safety, China will promote the implementation of passive safety rules for all OEMs (original equipment manufacturer) and will mandate installations of related systems, he said.
Therefore, the revenue prospect for Jinheng will increase greatly and the acquisition will bring Wonder Auto more business potentials, said Yuan.
Wonder Auto expects its sale channels to cover 90 percent of domestic OEMs in China after the purchase, according to him.
The acquisition will also help Wonder Auto and Jinheng fully use their customer bases, expanding cross-selling, upgrading R&D capability, sharing technologies and increasing value-added services of existing products.
The company has been growing quickly in recent years and its products are heavily concentrated toward components for autos with engine capacity below 1.6L.
That market segment is expanding rapidly along with the worldwide trend toward environment-friendly low emission vehicles.
Jinheng Holdings, listed in the Hong Kong Stock Exchange, is a hi-tech auto parts supplier.
It mainly develops and manufactures components of auto passive safety restraint systems, auto engine electronic injection management systems (EMS), and components of diesel engines.
