In an electrifying turn of events, shares of Dongfeng Motor Group, a prominent Chinese state-owned automaker, skyrocketed by an impressive 69.2% as trading resumed on Monday. This surge follows the announcement from its parent company that a plan is in motion to take the automaker private, offering shareholders a lucrative deal.

The stock opened at HK$10.10 (approximately US$1.29) per share, marking the highest price since November 2017. Although it later settled at HK$9.25, it still showcased a remarkable upsurge of 54.9%. This made Dongfeng Motor Group the star performer on the Hang Seng Automotive Index, which itself rose by 1.7%.

The broader Hang Seng Index mirrored this positive sentiment with a 1.2% increase. In a strategic move, Dongfeng Motor Corp announced plans to privatize Dongfeng Motor Group in a deal valued at HK$55.13 billion (around US$7.06 billion). Concurrently, it plans to spin off its electric vehicle arm, Voyah, with a separate listing in Hong Kong.

Under the proposed deal, Dongfeng Motor Corp aims to pay HK$6.68 per share, which translates to an 11.9% premium over Dongfeng Motor Group's last trading price on August 8, before shares were halted.

This ambitious privatization effort comes against the backdrop of a fierce and protracted price war among Chinese automakers, which has significantly raised operational costs and squeezed profit margins. Recently, Chinese regulators have heightened scrutiny over this intense competition, emphasizing the urgency of restructuring within the industry.

Back in February, Dongfeng Motor Group's shares had already surged over 80% following reports of a potential restructuring by its parent company, prompting speculations about possible consolidation among state-owned automakers. With the continued volatility and transformation in the automotive sector, investors are keenly eyeing the unfolding narrative at Dongfeng.