China's Geely buys black cab maker Manganese Bronze
LONDON (Reuters) - Chinese car maker Geely has bought Manganese Bronze, the maker of London's black taxis, for 11 million pounds, safeguarding jobs and production of the vehicles in Britain.
Manganese Bronze, whose taxis have been on British streets since 1948, went into administration last October, with about a third of its 300-strong workforce losing their jobs.
Geely, which already owned about a quarter of Manganese Bronze, on Friday said it had agreed a deal with administrator PricewaterhouseCoopers to buy "the business and principal assets" of the company.
"Geely's priority will be to re-establish the manufacture, sale and servicing of new and current vehicles on broadly the same basis as existed before the business went into administration," Geely Chairman Li Shufu said.
"This will include the continued assembly of the TX4 at Manganese Bronze's existing Coventry plant in the West Midlands."
Manganese Bronze has failed to turn a profit since 2007.
Late last year the company said its financial position was unclear after the discovery of a safety defect in its new TX4 model that led to a recall of 400 taxis and a halt to sales.
The recall was the latest in a spate of problems to have plagued the taxi maker and coincided with market share gains by rival Eco City Vehicles' Mercedes Vito taxi. Japan's Nissan Motor Co Ltd is also due to launch its own taxi in Britain.
Manganese Bronze shares closed at 10 pence on October11, the last day they traded on the London Stock Exchange, valuing the company at about 3 million pounds.
In 2006 Geely paid 53 million pounds for a 23 percent stake in Manganese Bronze and 52 percent of a Shanghai-based joint venture with the company. However, it took a charge of 100 million yuan ($16 million) to write down that investment in 2008.
"I am not sure why Geely would get itself into such a deal ... the black cab is too British to win mass appeal anywhere, not even in China," said John Zeng, Asia Pacific director for consultancy LMC Automotive.
"The best hope for Geely is to move the production line to China, cut costs and sell it back to London."
As well as technical difficulties, Manganese has been hit by a weak economy and delays in fulfilling key orders. The company sold 1,502 taxis in 2011, 9 percent fewer than in 2010.
Manganese reported a loss of 4.6 million pounds in the six months to the end of June on sales 11 percent lower than the same period a year earlier.
London mayor Boris Johnson said he was "delighted" with Friday's news and is keen to hear Geely's proposals for producing a "low-emission taxi to serve London in the near future".
(Additional reporting by Fang Yan in Beijing; Editing by Kate Holton and David Goodman)
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