GAC Honda to boost capital, acquire engine unit for integration

Guangzhou Automobile Group Co., Ltd. announced a capital increase agreement for its jointly-controlled entity, GAC Honda. The registered capital of GAC Honda will be enlarged from $541,000,000 to $867,215,960. The company, Honda Motor, and Honda China will contribute an aggregate of $326,215,960 in proportion to their existing capital contributions. This transaction is considered a connected transaction, subject to reporting and announcement requirements but exempt from circular and independent shareholder approval under Chapter 14A of the Listing Rules.

Concurrently, GAC Honda entered into an equity transfer agreement to acquire Dongfeng Motor Group's 50% equity interest in Dongfeng Honda Engine for 1,172,485,400 yuan. Upon completion of both the equity transfer and capital increase, GAC Honda will hold 100% of Dongfeng Honda Engine, and Guangzhou Automobile Group's attributable interest will become 50%. The company's contribution of 1,172,485,400 yuan to GAC Honda's capital increase will be financed by internal funds.

The equity restructuring aims to integrate GAC Honda’s engine operations, enhance supply chain stability, improve management efficiency, and reduce costs. Dongfeng Honda Engine's net profit after income tax for the year ended 31 December 2024 was 84 million yuan, based on an appraised value of 2,345.1936 million yuan.