China Guangzhou Auto in talks on Changfeng buy-paper

SHANGHAI, Aug 11 (Reuters) - Guangzhou Automobile Group Co, a China partner of Toyota Motor (7203.T), is in talks to take control of the parent of Hunan Changfeng Motors Co (600991.SS), the China Business News said on Monday.

Guangzhou Auto, parent of Hong Kong-listed Denway Motors (0203.HK), has been in talks since 2007 to take a majority stake in Hunan Changfeng group by buying a stake in its listed unit, and will close the deal before the end of the year, the newspaper said, citing an unnamed executive at Guangzhou Auto.

The report gave no financial details.

Hunan Changfeng, 16.07 percent owned by Mitsubishi Motors Corp (7211.T), has a market capitalisation of 2.3 billion yuan ($335 million) based on its mid-morning share price of 5.75 yuan. The shares were down 2.21 percent on the day, compared with a 1.27 percent drop in China's benchmark index .SSEC.

A spokesman at Shanghai-listed Hunan Changfeng could not confirm the report. Guangzhou Auto, which also runs a car venture with Honda Motor (7267.T), could not immediately be reached.

The paper said other Chinese automakers that have expressed an interest in Hunan Changfeng, a pickup and SUV maker, include Beijing Automotive Industry Holdings Co, a Daimler AG (DAIGn.DE) partner in China.

The Guangzhou Auto deal, if it goes ahead, would mark the latest consolidation move in the world's second-largest auto market, now crowded with more than 100 players.

The Chinese government, which eventually wants to have three to five big auto groups, has been encouraging mergers among domestic automakers. ($1=6.857 Yuan) (Reporting by Fang Yan; Editing by Edmund Klamann)