- Acquired at 6.5 Times 2007 Earnings -
- Ownership in Henglong Increased to 80% -
WUHAN, China, April 2, 2008 /Xinhua-PRNewswire-FirstCall/ -- China Automotive Systems, Inc. (Nasdaq: CAAS), a leading power steering components and systems supplier in China, today announced, on March 31, it entered into the final definitive agreement with Hubei Wanlong Investment Co. ("Hubei") to acquire an additional 35.5% of Henglong Automotive Parts Company ("Henglong") to increase its total ownership to 80%. This 35.5% ownership of Henglong alone represented more than US$ 5 million of net earnings in 2007.
In 2007, Henglong posted net income of USD$ 14 million. Henglong, formerly 44.5% owned by China Automotive Systems prior to this acquisition, is engaged in manufacturing power steering systems and components for China’s rapidly growing passenger vehicle market. Henglong’s main customers are among China’s leading automobile manufacturers and include Chery Auto, Brilliance Auto, BYD Auto, Geely Auto and FAW Volkswagen.
The purchase price of the acquisition will be approximately US$ 32.1 million. The payment will consist of US$ 10 million in cash with the remaining value to be paid in 3,023,542 shares of China Automotive Systems common stock valued at 7.3060 per share. At the closing, 1,170,000 shares of China Automotive Systems’ common stock will be issued and the remaining 1,853,542 will be issued in accordance with applicable NASDAQ requirements. The agreement is subject to local government authority’s final examination and approvals.
Mr. Hanlin Chen, Chairman of China Automotive Systems, stated, "We are very excited about the growth opportunities before us to fulfill our goal to become a global power steering powerhouse in the future. We have delivered what we promised to our shareholders on this acquisition by increasing our ownership in Henglong and immediately consolidating more profit into China Automotive Systems. With this acquisition, we continue to strengthen China Automotive Systems’ earnings, net margin and shareholders’ value."
Mr. Jie Li, Chief Financial Officer of China Automotive Systems, stated, "This transaction will be immediately accretive to net earnings. The value of Henglong’s 35.5% earnings we acquired would have resulted in increasing our 2007 diluted earnings per share to US$0.51from US$0.37, even after adjusting for the additional 3,023,542 shares to be issued."
About CAAS
Based in Hubei Province, People’s Republic of China, China Automotive Systems, Inc. is a leading supplier of power steering components and systems to the Chinese automotive industry, operating through seven Sino-foreign joint ventures. The Company offers a full range of steering system parts for passenger automobiles and commercial vehicles. The Company currently offers 4 separate series of power steering and 307 models of power steering with an annual production capacity of 1.1 million sets, steering columns, steering oil pumps and steering hoses. Its customer base is comprised of leading Chinese auto manufacturers such as China FAW Group, Corp., Donfeng Auto Group Co., Ltd., Brilliance China Automotive Holdings Ltd., Beiqi Foton Motor Co., Ltd. and Chery Automobile Co., Ltd. etc. For more information, please visit: http://www.caasauto.com .
Safe Harbor Statement
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations or beliefs, including, but not limited to, statements concerning the Company’s operations, financial performance and, condition and the impact of this acquisition on its financial performance. For this purpose, statements that are not statements of historical fact may be deemed to be forward-looking statements. The Company cautions that these statements by their nature involve risks and uncertainties, and actual results may differ materially depending on a variety of important factors, including, among others, the impact of competitive products, pricing and new technology; changes in demand for the Company’s products; changes in consumer preferences and tastes; and effectiveness of marketing; changes in laws and regulations; fluctuations in costs of production, delays and cost overruns related to developing and opening new production facilities; and other factors as those discussed in the Company’s reports filed with the Securities and Exchange Commission from time to time.
For further information, please contact:
Jie Li
Chief Financial Officer
China Automotive Systems
Email: jieli@chl.com.cn
Kevin Theiss
Investor Relations
The Global Consulting Group
Tel: +1-646-284-9409
Email: ktheiss@hfgcg.com
Stacy Dimakakos
Financial Media Relations
The Global Consulting Group
Tel: +1-646-284-9417
Email: sdimakakos@hfgcg.com
