UPDATE: Beijing Automotive Plans Bid For GM's Opel - Source
01 Juli 2009 - 9:53PM
Dow Jones News
China's Beijing Automotive Industry Holding Co. plans to present
a detailed bid for General Motors Corp.'s (GMGMQ) core European
Adam Opel GmbH operations within the next few days, hoping to step
in should GM's talks with Magna International Inc. (MGA) turn sour,
a person familiar with the matter said Wednesday.
In May, GM signed a memorandum of understanding to sell a
majority stake in Opel and its U.K. sister brand Vauxhall to
Canadian auto supplier Magna, which has launched an offer backed by
Russia's Sberbank Rossia (SBER.RS) and auto maker GAZ (GAZA.RS).
The agreement isn't legally binding, but Opel's powerful labor
unions have already voiced their support for it.
Beijing Automotive held discussions with GM last week about the
possibility of bidding for Adam Opel, The Wall Street Journal
reported on June 25, citing a person familiar with the situation.
The Chinese company has firmed up details of its offer after first
expressing its interest in the unit in May.
Magna still appears to be the front runner, though talks
continue with Beijing Automotive and RHJ International SA
(RHJI.BT), another person familiar with the matter said.
The tentative agreement with Magna is backed by EUR1.5 billion
in bridge financing provided by the German government to keep Opel
afloat after parent GM filed for bankruptcy protection in the
U.S.
RHJ appeared as a serious contender to Magna earlier this week,
after media reports suggested it was close to signing a memorandum
of understanding with GM on Opel.
But analysts question whether the Belgium-based financial
investor has the muscle for a deal after posting on Tuesday a EUR1
billion loss for its fiscal year.
Opel "is much too big," said KBC analyst Tom Simonts, adding RHJ
has, at most, just over EUR300 million to invest, and few assets to
sell for good money.
The Belgian investment company's chief executive, Leonhard
Fischer, said during a conference call Wednesday that RHJ is
seeking to raise cash for future investments and to sell some
assets.
He declined to comment on Opel, saying only that RHJ "would
always look at special opportunities if they are very special."
A person familiar with the situation said RHJ has tweaked its
offer for Opel and now proposes to cut fewer jobs in Germany than
initially planned in order to win over support from labor unions
and German politicians.
Negotiations over the fate of Opel, which employs around 26,000,
come at a delicate time. Germany is preparing for federal elections
in September and talks over large-scale job cuts could potentially
cost votes.
-By Christoph Rauwald, Dow Jones Newswires; +49-69-2972-5512;
christoph.rauwald@dowjones.com
(Norihiko Shirouzu contributed to this report.)