A deal struck this week puts a venerable British motoring brand in the hands of China's top car maker, raising hopes that Shanghai Automotive Co might do for MG what Germany's BMW did for the Mini.
Shanghai Auto on Wednesday agreed a $286 million dollar deal to acquire the vehicle and core auto parts operations of Nanjing Auto, an eastern China manufacturer which surprised car enthusiasts in 2005 by snapping up the MG brand and some other assets after the collapse of the British firm, MG Rover.
With a stock market value of $24 billion, Shanghai Auto, backed by parent SAIC, has financial clout roughly equivalent to Italy's Fiat or Hyundai of South Korea.
"Funding is obviously not a major concern now that the companies are joining forces," said Chen Qiaoning, analyst at ABN Amro TEDA Fund Management in Shanghai.
SAIC, which has joint ventures with General Motors and Volkswagen AG in China, already has a connection with the defunct MG Rover. Last year it introduced the Roewe 750 to the Chinese market.
The car is based on technology acquired from MG Rover and is priced to compete with Toyota Motor Corp's locally-made Camry. Nanjing Auto, for its part, announced a grand scheme to revive the MG marque when it rolled out its first MG sports cars and saloons, made at a plant in China, in April.
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