MSPEA abandons China auto parts privatization

The GP and Hanlin Chen – China Automotive's chairman and majority shareholder – said in a letter to the board that they had decided to withdraw the proposal in light of "recent market conditions." They initially proposed to acquire all outstanding shares in the company for $5.45 apiece, a slight premium to the August 31, 2017 closing price of $5.39. The stock has since lost about 28% in value, ending August 20 at $3.93.

Founded in 1993, China Automotive currently offers four separate series of power steering with an annual production capacity of over 5.5 million sets of steering gears, columns and steering hoses. Most of the company's business comes from Chinese auto manufacturers such as China FAW Group, Dongfeng Auto Group, BYD Auto, Beiqi Foton Motor, and Chery Automobile. However, its single biggest customer is Chrysler Group, which accounted for 14.3% of revenue last year.

Sales reached $499 million in 2017, up from $462 million the previous year, but the company swung from a net profit of $22.9 million to a net loss of $18.6 million over the same period. This was due to a one-off charge resulting from US tax reforms.

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• Topics
• Greater China
• Buyouts
• Industrials
• Morgan Stanley Private Equity Asia
• automobiles
• manufacturing