Weichai Acquires Heavy Dusk in Shaanxi Heavy Industry

In April 2010, the market rumored that both Weichai Power and Shaanxi Heavy-Duty's shareholder Shaanxi Provincial State-owned Assets Supervision and Administration Commission (SASAC) have been grudge-ridden over the years. The Shaanxi Provincial Government has agreed in principle that Weichai Power is 100% controlled by Shaanxi Heavy-duty Truck Co., Ltd. What is awkward is that soon afterwards, some media reported that Weichai Power and Shaanxi Automobile Group are still confrontational, and Tan Xuguang, chairman of Weichai Power, which specializes in capital operation, has not completed the “general reunification” of Shaanxi Heavy Duty Truck.

In April 2010, during the Western Conference and Fair, when the then governor of Shaanxi Province Yuan Chunqing met with Weichai Power Chairman Tan Xuguang, he said, “I hope you can strengthen the local zero while expanding the scale of production of Shaanxi Zhongqi and Fast. The building of supporting capacity of components will accelerate the formation of industrial clusters and will fully utilize Shaanxi's strong scientific and technological forces to actively carry out technical cooperation and set up R&D institutions in Shaanxi.”

At the same time, Tan Xuguang announced a development strategy at the China East-West Cooperation and Investment and Trade Fair. In the next 3 to 5 years, Weichai Power will invest another 5 billion yuan in its affiliated enterprises in Shaanxi to support the establishment of Shaanxi in the Shaanxi region. The heavy-duty truck is a leading heavy-duty truck manufacturing base, and a key auto parts manufacturing base with Fast Transmission as its leader.

In this regard, at that time, there was news from the market that the Shaanxi Provincial Government had agreed in principle to transfer the entire equity of Shaanxi Heavy Gas to Weichai Power, and Tan Xuguang had become a 100% absolute controlling shareholder with a 51% stake in Shaanxi Heavy Gas.

Has the dispute between shareholders, which lasted for several years, resolved overnight? In response to the incident of 100% controlling Shaanxi Heavy Gas by Weichai Power, on May 20, an official of the Shaanxi Provincial State Assets Supervision and Administration Commission stated that “this turmoil comes from misunderstandings from the outside world, and we will still cooperate according to the previous ratio and framework”.

Regarding such disparate claims, the reporter contacted the Weichai Power Securities Department by phone and their office staff said, “This type of major incident has not been heard. It is better to follow the announcement.”

In fact, Weichai Power and Shaanqi Power's two shareholder Shaanxi Provincial SASAC have “fighted for a fight” over the years. In August 2009, Shaanxi Automobile Group reported at its internal working meeting that Shaanxi Automobile Group's overall listing plan has been listed as a key plan of Shaanxi Province, and Shaanxi Automobile Group hopes to land on the domestic A-share market. Shaanxi Province hopes that Weichai Power will relinquish its controlling stake in Shaanxi Heavy Duty Truck and transfer the shares to Shaanxi Automobile Group, which will smoothly integrate SAIC's assets, which account for 80% of Shaanxi Automobile's operating revenue, into future listed companies.

"Shaanxi Group will not easily give up Shaw Capital's equity, otherwise the overall listing is only a vision, the current situation has changed." Some analysts said.

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