Jardine in Pact to Buy 20% Stake in Luxury-Car Distributor in China

Jardine Strategic Holdings Ltd. has agreed to spend HK$5.6 billion ($722 million) for a 20% stake in China's Zhongsheng Group Holdings Ltd., a distributor of luxury-car brands, Bloomberg News reports.

Zhongsheng distributes Audi, Mercedes-Benz and Porsche vehicles and will use the investment to expand its sales outlets. Jardine Strategic, part of the Jardine Matheson Group, owns hotels and convenience stores across Asia. Jardine also sells Mercedes-Benz cars in Singapore and Toyota vehicles in Indonesia.

Analysts tell Bloomberg the investment may be the first step in longer term cooperation between the two companies.

Zhongsheng will issue about 239 million shares at HK$10.80 each and sell convertible bonds worth HK$3.1 billion to Jardine, Bloomberg says, citing a statement. Jardine's stake in Zhongsheng will reach 20% after all the bonds are converted to shares.