Guangzhou Automobile Group, the Chinese partner of Japanese car giants Toyota and Honda, plans to sell A shares in mainland China through a merger with GAC Changfeng Motor, the Guangzhou-based automaker said Wednesday.

Guangzhou Auto will issue 1.6 new A shares or pay 12.65 yuan in cash for each existing Changfeng share, according to the company's statement to the Hong Kong stock exchange.

Mitsubishi Motors Corp, Guangzhou Auto's Japanese partner, said it accepted the cash offer and is expected to receive 961.4 million yuan for its 14.59-percent stake in Changfeng.

In total, Guangzhou Auto will issue no more than 470.11 million new A shares at 9.09 yuan per share. The share swap ratio represents a premium of 15 percent over Changfeng's average share price of the last 20 trading days, or a 29.56-percent premium over its average share price of the last three months before trading suspended on Oct. 28, 2010.

The merger and share swap proposal still need the approval of regulators and company shareholders.

Changfeng announced on the same day that it cashed in 155.49 million yuan in net profit in 2010, surging 451.95 percent from a year earlier. The company's sales revenue last year was 6.2 billion yuan, up 27.04 percent year-on-year.

Shares of Changfeng rose sharply by 8.9 percent and closed at 15.78 yuan in the morning session on Thursday.

China's business press carried the story above on Thursday. China.org.cn has not checked the stories and does not vouch for their accuracy.