DAIMLER AG is expected to set up a joint venture with China's Beiqi Foton Motor Co to make medium and heavy-duty trucks after a proposed acquisition was denied by China's regulatory authorities.
Beiqi Foton, the nation's biggest maker of light commercial vehicles, said it has signed new agreement with Daimler, quitting an earlier plan to sell 297 million shares to its US counterpart, according to a statement filed to Shanghai Stock Exchange over the weekend.
"The transaction was not approved by the government because significant changes have taken place in China's economy environment and the stock market since the contract was reached," the statement added.
Last November, Daimler agreed to pay 816.8 million yuan (US$110.4 million) to take a 24-percent stake in Foton as part of its efforts to increase its presence in China's expanding commercial vehicle market.
Industrial analysts said the lack of approval could be blamed on the low transaction price amid the booming stock market in the first half.
Shares of Beiqi Foton gained 6.13 percent, or 0.66 yuan, to close at 11.42 yuan yesterday, four times more than the original purchasing price set at around 2.76 yuan per share.
Daimler earlier quit an existing joint venture in China, clearing the way for the establishment of the new venture.