Beijing Auto submits GM Europe offer - Chinese carmaker bids €660m

Beijing Auto submits GM Europe offer - Chinese carmaker bids €660m
By Daniel Schäfer in Frankfurt and John Reed in London
Copyright The Financial Times Limited 2009
Published: July 3 2009 13:21 | Last updated: July 3 2009 19:29
http://www.ft.com/cms/s/0/e718d434-67c8-11de-848a-00144feabdc0.html


Beijing Automotive Industry Corporation has submitted a late offer for General Motors’ European operations, formally putting the Chinese carmaker in the race against a frontrunning Russian-backed bid.

BAIC bid €660m ($923m) for a stake in GM’s Opel unit before the deadline on Thursday night, three people close to the sale said on Friday. The non-binding offer is the third received by GM in an unexpectedly tight race.

Magna International, the Canadian supplier that signed a memorandum of understanding with GM in May to buy 55 per cent with Russia’s Sberbank, is still ahead. But a source close to GM described BAIC’s approach as “credible and well-advised”.

GM recently ramped up talks with rival suitors after tougher-than-expected talks with Magna.

Karl-Theodor zu Guttenberg, Germany’s economics minister, has encouraged rival bids because of his reservations about Magna’s offer, which most of his colleagues endorsed in late May. Opel’s bail-out has become an election-year issue in Germany, where Magna has strong backing.

RHJ International, a Brussels-based industrial holding linked to US buy-out group Ripplewood, has also made a non-binding offer. Fiat is also interested in Opel, but pledged no cash for the stake.

BAIC, which is being advised by Deutsche Bank, made a last-minute expression of interest in Opel in late May.

“There is a huge opportunity for someone else to come in, but Magna still has the lead role,” a person briefed on the sale said. GM, Magna, and the other bidders are not commenting.

Someone who had seen BAIC’s offer said it was “comparable with the others” but with the “very significant” difference that it would let GM keep a larger stake.

GM, which filed for bankruptcy protection in the US last month, is selling the stake to raise government financing for its Opel and Vauxhall businesses in Europe.

in the US last month but could exit Chapter 11 next week, is selling the stake to raise government financing for its European arm.

Its talks with Magna have hit snags over access to GM’s global intellectual property by Magna and its Russian partners, and arrangements for markets such as Canada, Russia and China.

If its bid succeeds, Magna will make cars with Gaz, Oleg Deripaska’s Russian car company.