GAC Group (02238) plans to acquire 50% of FAW Toyota's shares and FAW Co., Ltd. will become the second largest shareholder

According to the Zhitong Finance App, Guangzhou Automobile Group (02238) announced that on September 28, 2026, the company entered into an acquisition agreement with the seller FAW shares. The company conditionally agreed to the acquisition, while the seller conditionally agreed to sell 50% of the shares held by the seller in the target company FAW Toyota.

The Company intends to pay for the proposed acquisition by issuing price shares (i.e. issuing A shares). The price of each consideration share is RMB 5.75. The final cost will be determined by both parties after fair negotiations. It mainly refers to the valuation of the target company contained in the evaluation report, and has been registered or approved by the competent state-owned assets supervisory and management agency or state-owned enterprise, agreed on the basis of fair voluntary principles, and confirmed by the company and the seller through a supplementary agreement.

After the proposed acquisition is completed, it is anticipated that the target company will become a significant joint controlling entity of the company. The company holds 50% of its shares, and the target company's financial data will not be incorporated into the Group's comprehensive financial statements. The Toyota Motor Group will continue to hold the remaining 50% of the underlying company's shares, and the seller will no longer hold any shares in the target company.

The Company intends to make a proposed offering to no more than 35 specific target subscribers who are independent third parties to raise supporting capital. The total amount of supporting capital raised shall not exceed 100% of the proposed acquisition price, and the number of A shares to be issued shall not exceed 30% of the total issued share capital of the Company before the proposed issuance.

After the proposed transaction is completed, FAW Co., Ltd. will become the second largest shareholder of the Company. However, it will not lead to a change in the actual controller of the Company, nor will it constitute a restructuring and listing.

China FAW is an important central enterprise in China's automobile industry, and has accumulated deep experience in vehicle R&D and manufacturing, industrial chain layout, and brand operation. The company is a major domestic automobile industry group, and continues to deploy in areas such as new energy and intelligent transformation, independent brand development, and industrial ecosystem construction. The two sides carry out strategic cooperation based on their respective resource endowments and advantages, further promote resource sharing and complementary advantages, and deepen collaboration in the fields of technology, supply chain and market. The proposed transaction will help give full play to China's FAW's accumulation and layout advantages in various fields such as vehicles and industrial chains, as well as the company's advantages in new energy and intelligent transformation, independent brand development, and industrial ecological collaboration, and further unleash collaborative value.

China FAW and the Company carry out strategic cooperation based on their respective industrial bases and resource endowments. The proposed transaction is one of the important implementation projects for deepening strategic cooperation between the two sides. After the proposed transaction is completed, FAW Co., Ltd. will become the company's second-largest shareholder and play an important strategic role. Relying on China's FAW's accumulation and layout advantages in various fields such as vehicles and industrial chains, while leveraging the company's advantages in new energy and intelligent transformation, independent brand development, and industrial ecological collaboration, it will further promote resource sharing and complementary advantages between the two sides, inject collaborative value into the company, and help improve the level of governance and profitability. The proposed transaction is also an important practice of complementary advantages between central enterprises and local state-owned enterprises and central local collaboration. It is conducive to promoting intensive allocation of industrial resources, deepening collaboration in technology, supply chain and markets, helping to upgrade the automobile industry in the Greater Bay Area, and jointly promoting high-quality industrial development.

1. Inject profitable assets, improve the company's profitability, and improve the quality of the company

In recent years, due to a combination of factors such as increased price competition in the industry, declining earnings from joint ventures, asset impairment measures, and increased investment in new energy transformation, the company's operations were under pressure, and shareholders belonging to the parent company achieved losses in 2025. As a leading Japanese joint venture, FAW Toyota's operating fundamentals are steady. According to unaudited financial data, the net profit achieved by FAW Toyota in 2024 and 2025 was approximately RMB 4.717 billion and RMB 4.234 billion, respectively.

After the proposed transaction is completed, the company will hold 50% of FAW Toyota's shares, which can directly increase the company's investment income and improve net profit; relying on the large-scale advantages formed after the proposed transaction, the company's industry voice and influence in supply chain negotiations, terminal channel layout, and industrial policy docking will be further enhanced. As FAW Toyota and GAC Toyota achieve collaborative operation and management, resource allocation efficiency is further improved, and profit expectations in the joint venture sector are expected to continue to improve, which will help consolidate the company's operating foundation, enhance the company's ability to continue to operate and withstand risks, ensure the company's long-term steady development, and safeguard the legitimate rights and interests of the company and all shareholders.

2. Deepen the reform of state-owned state-owned enterprises and optimize the efficiency of state-owned capital allocation

The proposed deal is a major strategic cooperation between Guangzhou's state-owned enterprises and central enterprises in the automotive industry. It is in line with the decisions and arrangements of the Party Central Committee and the State Council to deepen the reform of state-owned state-owned state-owned enterprises, promote the optimization of the layout and structural adjustment of the state-owned economy, and conforms to the relevant policy orientation of the national automobile industry. Through the proposed transaction, the allocation efficiency of state-owned capital in the automobile industry will be further optimized, which is conducive to increasing the concentration of the domestic automobile industry and consolidating the foundation for high-quality development of the automobile industry.

3. Joint efforts to reduce repeated investment and comprehensively enhance the overall competitiveness of both parties

The proposed transaction will promote the integration and collaboration of the two major joint venture systems of FAW-Toyota and GAC Toyota, which will help reduce repeated investment within the same brand system and stabilize the basic profit market of the joint venture business. By integrating the two parties' superior resources such as localized R&D, industrial chain supply chains, production bases and market expansion, the proposed transaction shares innovation costs, concentrates efforts on breaking through key core technologies, comprehensively enhances the comprehensive competitiveness of both parties, helps enterprises seize development opportunities in the process of transformation and restructuring of the global automobile industry, and accelerate the construction of a globally competitive automobile group.

Proceeds raised from the proposed issuance are intended to be used to build the target company's project, supplement the working capital of the Company and the target company, repay debts, and pay transaction taxes and intermediary agency fees for the proposed transactions, etc., thereby improving the overall financial situation and promoting the future development of the Group.