BMW s Chinese JV partner Brilliance could be an acquisition target for state-owned FAW, according to a Reuters report.
The report cited anonymous sources with direct knowledge of the matter and valued the deal at an estimated USD7.2bn.
Major Brilliance shareholder Huachen Automotive Group has been declared bankrupt and has entered a debt restructuring programme; it defaulted on major loan repayments last year as a cashflow crisis hit.
The report said that plans are under discussion that would entail FAW initially purchasing 30.43% of Brilliance owned by Huachen and 11.89% owned by the state-controlled Liaoning Provincial Transportation Investment Group. After that it would bid for the rest of Brilliance s shares.
FAW considers taking over BMW partner Brilliance
According to
Reuters, the FAW Group, which also produces electric cars for the Chinese market together with Volkswagen and Audi, could spend 7.2 billion US dollars (about six billion euros) for the contemplated takeover and is trying to get other investors on board. Brilliance China Automotive Holdings Ltd is listed on the stock exchange.
Reuters’ sources told the news agency that in the scenarios currently under discussion FAW would first acquire 30.43 per cent of Brilliance from Huachen and another 11.89 per cent from the state-controlled Liaoning Provincial Transportation Investment Group. Subsequently, FAW would then make a mandatory bid for the rest of Brilliance’s shares. They cited a price of 11 Hong Kong dollars per share (1.18 euros), a 70 per cent premium over last month’s average share price of 6.48 Hong Kong dollars. After the report was published, Brilliance shares rose to 7.99 Hong Kong dollars (0.86 euros).