Weichai Power Co Ltd, one of the largest diesel engine makers in China, agreed to buy the remaining 71.88 per cent of Torch Automobile Group Co Ltd shares to obtain complete stake control of the company, said Weichai yesterday.
The deal was subject to approval by shareholders and China's regulatory body, it said in a statement.
Weichai will seek shareholder approval at a general meeting to be held on December 29. Torch Automobile will hold a shareholders meeting on January 8.
The Hong Kong-listed Weichai said earlier it planned to list its A-shares on the Shenzhen Stock Exchange after it privatises Torch Automobile.
In 2005 it bought stake in Torch Automobile and became one of the biggest shareholders in the firm.
"The deal will help Weichai to streamline the company structure," said Zhang Xin, an analyst with Guotai Junan Securities.
"It will enhance the company's position in the auto parts market as well as in the heavy-duty truck market," he added.
As a major Chinese automaker, Torch Automobile owns 51 per cent of Shaanxi Heavy-Duty Motor Co Ltd, one of the five largest heavy-duty truck makers in China.
Weichai, which used to produce engines for heavy-duty vehicles, was on the brink of bankruptcy in the mid-1990s when China's heavy-duty vehicle market was experiencing a slump.