BEIJING (Reuters) - Auto dealership China Grand Automotive Services <600297.SS> has bought a controlling stake in luxury car dealer Baoxin Auto Group (HK:1293) for HK$8.2 billion (£698 million), the companies said on Friday.
China Grand, the country's largest auto dealership group, paid HK$5.99 per share to buy a 53.6 percent stake in Baoxin with the purchase occurring on Dec. 4, the companies said in filings to the Hong Kong and Shanghai stock exchanges.
China Grand will also be able to acquire up to 75 percent of Baoxin, the country's biggest dealer of BMW (DE:BMWG) brand cars, for about HK$11.5 billion, according to the filings.
"The company (Baoxin) is a leading luxury and ultra-luxury automotive sales and services group in the PRC (People's Republic of China)," the companies said in their joint statement to the Hong Kong exchange.
"The investment in the company (Baoxin) through the offers (China Grand Auto) represents an important opportunity to diversify its brand portfolio and expand its geographical presence in an increasingly competitive PRC dealership market."
The deal comes as China's auto market, the world's largest, slows from its previously breakneck pace as the economy expands at its weakest rate in 25 years.
The national automakers association chief said on Thursday sales were likely to grow around 3 percent in 2015 and 5-7 percent next year.
Baoxin's Hong Kong-listed shares, which closed at HK$4.15 last week before trading was halted on Monday, will resume trade on Dec. 14. Trade in China Grand Auto's Shanghai-listed shares will remain suspended since a halt in late September pending Chinese authorities' approval of the transaction.
China Grand had previously said it was considering buying a stake in Baoxin using cash.
Buyout firm TPG sold its reportedly 40 percent stake in China Grand last year before the dealer group pursued a listing on the Shanghai Stock Exchange.