China’s GAC has signed a conditional agreement to acquire state-owned automobile manufacturer FAW Group’s 50% interest in FAW Toyota Motor.

Under the agreement, GAC plans to issue consideration shares to FAW Group at 5.75 yuan ($0.86) per share.

No additional cash payment will be made unless the parties separately agree otherwise.

The final consideration and number of shares to be issued will depend on the completion of audit and valuation work, as well as a supplemental agreement between the parties.

Tianjin-headquartered FAW Toyota Motor Company was established in 2000 as a joint venture between FAW Group and Toyota, with each party holding 50% of the equity.

Toyota Motor Group holds its remaining 50% interest through Toyota Motor and Toyota Motor (China) Investment.

Following completion of the transaction, GAC would hold a 50% stake in FAW Toyota alongside Toyota Motor Group.

FAW Group would become GAC’s second-largest shareholder, although GAC said the deal would not alter its actual controller.

FAW Toyota’s financial information would not be consolidated into GAC’s accounts.

It recorded unaudited net profit after tax of 4.71bn yuan in 2024, 4.23bn yuan in 2025, and 1.01bn yuan in the six months ended 30 June 2026.

Its total assets stood at approximately 43.06bn yuan on 30 June 2026, while net assets were approximately 29.66bn yuan.

GAC has also proposed a non-public A-share issue to no more than 35 independent third-party investors to raise supporting funds.

The acquisition remains subject to shareholder approvals, clearance from the Shanghai Stock Exchange, registration with the China Securities Regulatory Commission, and other conditions.

The proposed financing depends on completion of the acquisition, while the acquisition does not depend on the financing.

The move is understood to form part of Toyota’s efforts to consolidate and streamline its struggling Chinese operations and improve efficiency as competition from domestic automakers continues to surge.