BEIJING - Ford Motor Co. has paid $54.5 million to raise its equity stake in China's Jiangling Motors Corp. to 30 percent from 20 percent.
Under the deal, Ford will purchase 120 million shares of a 170-million-share new issue by Jiangling. The remainder of the share issue is aimed at institutional and private investors.
The purchase raises Ford's total investment in Jiangling to
$94.5 million. The extra 10 percent stake thus is costing Ford twice what it paid for its initial 20 percent share.
'It does represent a premium for the shares,' Ford Motor China spokeswoman Stephanie Hallford acknowledged. 'But we consider it a strategic investment toward the development and growth of JMC and the China Transit program.'
Ford also gained two more seats on the Jiangling board, bringing its total to five. Jiangling holds another five, while Shanghai Automotive Industrial Corp. holds one.
Jiangling builds a passenger-van version of the Ford Transit, the only Ford vehicle built in China.
The share issue comes less than one month after Jiangling launched a long-wheelbase, 15-seat version of the Transit, which retails for the equivalent of $28,000 to $30,000. Earlier this year, the company launched nine- and 12-seat versions of the Transit.
Other derivatives will follow, although no dates have been fixed for their launches.
'Our strategy is to phase in capacity as the market demands, rather than pouring in a lot of investment and waiting for the market to develop,' said Hallford.