Shanghai Automotive Industrial Corporation, China’s largest carmaker, is to take over the vehicle assembly and parts operations of rival Nanjing Automobile in a move officials intend will create an internationally competitive national champion.

Under the deal, SAIC’s Shanghai-listed unit SAIC Motor will pay Rmb2.1bn ($286m) for the core operations of Nanjing Auto, which include the British MG brand. Nanjing Auto’s parent will also get a stake of just under 5 per cent in SAIC Motor.