German automotive giant Volkswagen (VW) is in discussions over two separate acquisitions of Chinese electric vehicle manufacturers, according to Reuters.
Citing two sources, the news provider said talks are at a late stage and deals could be announced later this week.
Reuters said the move comes as the buyer attempts to further establish itself in China, the world’s largest market for environmentally-friendly vehicles.
In the first of the two transactions, the people said VW is negotiating the purchase of a 50.0 per cent stake in Anhui Jianghuai Automobile Group Holding for no less than CNY 3.50 billion (USD 488.96 million).
The sources, who did not wish to be identified as the matter is private, said the firm is also planning a purchase of an unspecified holding in Guoxuan High-Tech.
Although the exact size of the stake being acquired in the latter has not been revealed, the people told Reuters the deal will make VW the firm’s biggest shareholder.
They added that negotiations are ongoing and details could change.
For their part, all of the companies involved declined to comment on the report.
One source told Reuters that VW will subsequently inject new funds into its joint venture with JAC.
In 2020 to date, there have been 13 announced instances of automobile manufacturers targeting Chinese companies, while these deals have a combined value of USD 6.08 billion, according to Zephyr, the M&A database published by Bureau van Dijk.
This is in comparison to the whole of 2019, when 39 such deals worth an aggregate USD 7.68 billion were signed off.
The most valuable transaction in which an automobile maker targeted a Chinese firm so far in 2020 was worth USD 4.10 billion and saw NIO, alongside other investors, subscribe to a private placing by NIO (Anhui) Holding.
© Zephus Ltd