GAC Group (SSE: 601238) plans to issue shares to acquire China FAW's 50% stake in FAW Toyota, a restructuring that would hand the Guangzhou automaker positions in both of Toyota's Chinese joint ventures and make FAW its second-largest shareholder.

GAC disclosed the target and preliminary plan on Monday, and its A-shares will resume trading at Tuesday's market open, September 29. The stock has been suspended since September 14, when GAC first announced it would acquire a stake in an unspecified vehicle joint venture held by FAW.

The board has approved the preliminary plan. Shares issued to fund the acquisition will be priced at 5.75 yuan ($0.85) each, though the transaction price and the number of shares remain undetermined because audit and valuation work is incomplete. GAC's ultimate controller will stay the Guangzhou State-owned Assets Supervision and Administration Commission.

The deal would give GAC stakes in Toyota's northern and southern China joint ventures — FAW Toyota and GAC Toyota — and pave the way for coordination in R&D, production, supply chains and sales. GAC said it plans to align localized R&D, supply chains, production sites and market expansion across the two ventures to cut duplicate investment and share the cost of technology development.

FAW Toyota builds vehicles and engines in Tianjin, Changchun and Chengdu, producing gasoline, hybrid and battery-electric models. Combined, the two Toyota ventures accounted for 17.03% of China's joint-venture passenger vehicle sales in 2025, according to CAAM data cited in GAC's plan.

The financial rationale is blunt. GAC said in the plan it posted a net loss attributable to shareholders in 2025, weighed down by price competition, declining earnings from its joint ventures and spending on its transformation. FAW Toyota's profits are also under pressure: unaudited figures show revenue rose to 108.62 billion yuan in 2025 from 106.57 billion yuan in 2024, while net profit fell to 4.23 billion yuan from 4.72 billion yuan. In the first half of 2026, FAW Toyota booked revenue of 40.73 billion yuan and net profit of 1.01 billion yuan.

GAC warned that continued price competition and investment in electrification and smart-vehicle technologies could further weigh on profitability. It expects the acquisition to contribute positively to investment income and net profit, but cannot yet quantify the financial impact while audit and valuation work is unfinished.

GAC also plans to issue shares to no more than 35 qualified investors to raise supporting funds for FAW Toyota projects, working capital, debt repayment and transaction expenses. That fundraising would be capped at 100% of the acquisition price, with the amount still to be set. Completion of the acquisition does not depend on the fundraising succeeding.

The deal lands as Beijing pushes consolidation. The 15th five-year plan for the intelligent connected NEV industry, released earlier this month, calls for stronger efforts to promote mergers, acquisitions and cross-regional consolidation among automakers.

The transaction still faces hurdles: completing audit and valuation work, another GAC board review, shareholder approval, Shanghai Stock Exchange review and CSRC registration, among other procedures. GAC said completion remains uncertain.

What to watch next: the resumption of GAC's A-shares on September 29 and the market's read on the deal, the final valuation of FAW Toyota's 50% stake once auditors finish, and the shareholder and regulatory approvals that will determine whether Toyota's China operations consolidate under one local partner.