A Case: MBO Of Yutong Bus

Zhengzhou Yutong Bus Co., Ltd is a listed company, established on the basis of the former state-owned enterprise. Presently Yutong Bus ranks the first of sales, revenue and profit in the circle of bus manufacturing in China.As the biggest shareholder, Yutong Group held the state-owned shares of Yutong Bus. In June 2001, Zhengzhou Municipal State-owned Assets Management Bureau transferred 89.8% of the equity of Yutong Group to Shanghai Yutong Venture &Investment Co, Ltd which was controlled by 21 Yutong employees headed by Tang Yuxiang who held the biggest share. Ministry of Finance and SASAC did not authorize the transferring agreement because the policy of MBO of state-owned enterprises was still unclear. The attribute of shares of Yutong Bus held by Yutong Group couldn't be changed.In December 2003, Shanghai Yutong proceeded against Zhengzhou Finance Bureau and got 90% of equity of Yutong Group through judicial auction. In January 2004, the attribute of shares of Yutong Bus held by Yutong Group was changed from state-owned shares to ordinary-corporation-owned shares. This case describes the process of MBO of Yutong Bus in detail. The author analyzes policy environment, buyout pricing, capital origin, information disclosure and judicial auction in this case. MBO in China is different from it in Western nations. MBO of Yutong Bus is a case under special ambient conditions. After the issuing of related policy, Yutong's pattern can't be duplicated any more. MBO is not the main choice of implementing the "state capital out and private capital in" strategy because some important conditions are still necessary for companies to implement MBO successfully.