Beijing Automotive Industry Corp (BAIC), the joint venture partner of Germany’s Daimler, may bid for General Motors’ Saab unit after its attempt to acquire Opel looks unlikely to succeed, market sources said.
BAIC entered a bid for Opel last month a day after the seller’s deadline. Canada’s Magna International signed a letter of intent with GM on June 1 to acquire Opel and is expected to take about four or five weeks to finalise the deal.
German government officials said on Friday they were still talking with other bidders in the event a deal with Magna fell through.
Analysts in Beijing said that BAIC’s interest would not be limited to the Opel brand and the company would want to look at other brands GM was selling as well as opportunities that may exist as many global carmakers struggle in the weak economic environment.
“BAIC is always looking at the chances to make overseas acquisitions, especially if the prices of the assets are reasonable,” said analyst Chen Qiaoning at ABN Amro TEDA fund. “But, of course, the company will retreat if the prices are too high.”
BAIC officials could not be reached for comment.
GM plans to shed Opel in Germany, Saab in Sweden, and Vauxhall in Britain, as the US carmaker tries to generate cash and streamline its business to survive.
GM sold its sports utility vehicle brand Hummer on Wednesday to privately owned Sichuan Tengzhong Heavy Industrial Machinery in a deal expected to be between US$200 million and US$300 million, and announced on Saturday it sold its Saturn brand to car racing magnate Roger Penske for an undisclosed amount.
The over 100-year-old firm filed for bankruptcy on June 1 with debt of US$178.2 billion, more than twice its assets. As part of Chapter 11 filing the US government will extend loans to the company and take a 60 per cent stake.
Beijing had indicated to its car industry that it would support moves to acquire assets overseas, sources said, despite recent troubles faced by some industry players.
Sources said Dongfeng Motor, the third largest carmaker, had looked at the possibility of acquiring Saab but the carmaker’s interest faded on fears that it would fail to turn the company around, much as rival Shanghai Automotive Industry Corporation was not able to manage its purchase of South Korea’s Ssangyong Motor.
SAIC bought a controlling stake in Ssangyong in 2004 but the company went bankrupt in January.
Mainland carmakers face daunting challenges in acquiring European or American car companies not least of which include dealing with unions, different labour laws and radically different regulatory regimes.
They stand to gain valuable technology and distribution networks.
Many market observers say it makes more sense for mainland carmakers to buy vehicle parts manufacturers, many of whom are also distressed.
Geely Auto bought Australian parts supplier Drivetrain System International for A$58 million (HK$329.79 million) last month.
In 2005, Nanjing Automobile Group acquired Britain’s MG Rover for US$87 million.
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BAIC may consider bid for GM’s Saab
Swedish unit might tempt after Opel slip
Tim LeeMaster and Kandy Wong
8 June 2009
Beijing Automotive Industry Corp (BAIC), the joint venture partner of Germany’s Daimler, may bid for General Motors’ Saab unit after its attempt to acquire Opel looks unlikely to succeed, market sources said.
BAIC entered a bid for Opel last month a day after the seller’s deadline. Canada’s Magna International signed a letter of intent with GM on June 1 to acquire Opel and is expected to take about four or five weeks to finalise the deal.
German government officials said on Friday they were still talking with other bidders in the event a deal with Magna fell through.
Analysts in Beijing said that BAIC’s interest would not be limited to the Opel brand and the company would want to look at other brands GM was selling as well as opportunities that may exist as many global carmakers struggle in the weak economic environment.
“BAIC is always looking at the chances to make overseas acquisitions, especially if the prices of the assets are reasonable,” said analyst Chen Qiaoning at ABN Amro TEDA fund. “But, of course, the company will retreat if the prices are too high.”
BAIC officials could not be reached for comment.
GM plans to shed Opel in Germany, Saab in Sweden, and Vauxhall in Britain, as the US carmaker tries to generate cash and streamline its business to survive.
GM sold its sports utility vehicle brand Hummer on Wednesday to privately owned Sichuan Tengzhong Heavy Industrial Machinery in a deal expected to be between US$200 million and US$300 million, and announced on Saturday it sold its Saturn brand to car racing magnate Roger Penske for an undisclosed amount.
The over 100-year-old firm filed for bankruptcy on June 1 with debt of US$178.2 billion, more than twice its assets. As part of Chapter 11 filing the US government will extend loans to the company and take a 60 per cent stake.
Beijing had indicated to its car industry that it would support moves to acquire assets overseas, sources said, despite recent troubles faced by some industry players.
Sources said Dongfeng Motor, the third largest carmaker, had looked at the possibility of acquiring Saab but the carmaker’s interest faded on fears that it would fail to turn the company around, much as rival Shanghai Automotive Industry Corporation was not able to manage its purchase of South Korea’s Ssangyong Motor.
SAIC bought a controlling stake in Ssangyong in 2004 but the company went bankrupt in January.
Mainland carmakers face daunting challenges in acquiring European or American car companies not least of which include dealing with unions, different labour laws and radically different regulatory regimes.
They stand to gain valuable technology and distribution networks.
Many market observers say it makes more sense for mainland carmakers to buy vehicle parts manufacturers, many of whom are also distressed.
Geely Auto bought Australian parts supplier Drivetrain System International for A$58 million (HK$329.79 million) last month.
In 2005, Nanjing Automobile Group acquired Britain’s MG Rover for US$87 million.
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