Foxconn in Taiwan, a leading assembly of Apple’s iPhone, is showing signs of producing electric vehicles. The company completed the acquisition of a pickup truck manufacturing plant in Ohio for $230 million earlier this year, and this time it signed a contract to buy a significant stake in the company and secure up to two board seats. In the Middle East, it has recently announced that it will also create a joint venture with Saudi Arabia for electric vehicles.
According to Bloomberg, Rosetown Motor Group announced on the 7th (local time) that it would hand over 18.3% of its preferred and common shares to Foxconn. Foxconn will invest up to $170 million (about 235.7 billion won) for this purpose.
Bloomberg explained that the deal should be reviewed by the CIFUS, an organization within the U.S. government. Shares of Rosetown Motor Group rose about 11% in after-hours trading.
The stock deal intensifies the bond between the two companies, and Foxconn will secure significant voting rights for Rosetown Motor Group over the next two years.
“We are strengthening our strategic partnership with Foxconn,” Rosetown Motor Group Chairman Dan Ninibagi said in an interview. “It’s another step in that direction. “This deal provides capital for electric vehicle programs jointly developed by the two companies,” he explained.
Foxconn can buy up to 9.9% of Rosetown Motor Group’ stake without CIFUS’ permission, and it needs U.S. government approval to secure more than that.
Assuming that the deal is approved, Foxconn can own up to 19.9% of common shares without voting rights, Bloomberg said. Chairman Ninibagi said that even if Foxconn purchases more stocks, it cannot exceed voting stocks.
Separately, Rosetown Motor Group announced its third-quarter earnings on the same day, recording an operating loss of $154.8 million.
Earlier, Foxconn announced on the 3rd that it has decided to create a joint venture called “CEER” with Saudi Arabia’s sovereign wealth fund, Public Investment Fund (PIF). Foxconn will be in charge of developing electronic technologies such as autonomous driving at the corporation.
KS CHOI
ASIA JOURNAL
