UPDATE 2-Denway falls even as shareholder supports privatisation

* Denway shrs as much as 7 pct; broader mkt down over 2 pct

* Shares down 27 percent since privatisation bid

* “Valuation ratios are fair” – Templeton

(Adds Templeton’s confirmation, updates share price)

HONG KONG/GUANGZHOU, May 25 (BestGrowthStock) – Shares in Denway
Motors (0203.HK: ) fell as much as 7 percent on Tuesday, despite
news that Templeton, its largest minority shareholder, is
supporting a controversial plan by Denway’s parent to take the
company private.

Denway shares have tumbled 27 percent since last week, when
parent company Guangzhou Automobile, China’s sixth-biggest car
maker, first announced its plan to take Denway private.
[ID:nTOE641001]

Investors expressed concern over the valuation of the deal,
which would see Denway shares swapped out for Guangzhou Auto
shares ahead of a listing in Hong Kong by the China car maker.

By 0326 GMT, Denway shares pared earlier losses and were
down 2.4 percent at HK$3.25. The benchmark Hang Seng Index
(.HSI: ) had fallen 2.19 percent.

Templeton Asset Management, Denway’s second-biggest
shareholder with a 15.47 percent stake, planned to support the
privatisation offer, a spokeswoman told Reuters on Tuesday.

“We have enough to block this, but we think the deal makes
sense,” Templeton executive chairman Mark Mobius said,
according to the South China Morning Post. “We would have liked
to have seen a dividend paid out before the deal … but we
think the valuation ratios are fair and will go along with it.”

Guangzhou Auto Chairman Zhang Fangyou told reporters in
Guangzhou that Templeton supported the privatisation because
“it’s a good deal”.

Guangzhou Auto has already said that Australian fund
manager Platinum Investment Management, which holds 5.22
percent of Denway, had signed a binding agreement to support
the privatisation.

Guangzhou Auto is the China partner of Honda Motor
(7267.T: ), Toyota Motor Corp (7203.T: ) and Fiat SpA (FIA.MI: ). It
holds 37.9 percent of Denway, which is the 50-50 joint venture
partner with Honda in Guangqi Honda.

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UPDATE 2-Denway falls even as shareholder supports privatisation