DaimlerChrysler to buy 24 pct stake in China's Beiqi Foton - report

BEIJING (XFN-ASIA) - DaimlerChrysler AG is expected to buy a 24 pct stake in Beiqi Foton Motor Co Ltd (SHA 600166), the 21st Century Business Herald reported.

The newspaper quoted an unidentified source as saying that the Chinese listed company will issue an unspecified number of new shares to DaimlerChrysler.

The deal is expected to give Beiqi access to DaimlerChrysler expertise in heavy-duty truck manufacturing.

The report did not provide further details of the transaction.

Beijing Automotive Industry Holding Co is currently Beiqi Foton's largest shareholder, with a 32 pct stake.

The two sides have been in discussions for some time, the report said. But China's current policy, which allows foreign auto makers to set up at most two passenger-car joint ventures and two commercial-vehicle joint ventures, had prevented the deal from going through, the report said.

DaimlerChrysler has a commercial-vehicle venture, DaimlerChrysler Vans (China) Ltd, with Fujian Motor Industry Group and Taiwan-based China Motor Corp and another China venture, Yaxing Benz Ltd, with Jiangsu Yaxing Motor & Coach Group.

The report said that Jiangsu Yaxing agreed to take over management of Yaxing Benz venture last month, paving the way for the establishment of another DaimlerChrysler commercial-vehicle joint venture.

The deal is subject to approval by regulators, the report said.

Trading in Beiqi Foton shares was suspended from today, pending an announcement.