Chinese FAW is considering acquiring BMW partnerFebruary 3, 2021
FAW Group is considering acquiring Brilliance China Automotive Holdings for an estimated $ 7.2 billion in a two-stage deal that will privatize BMW’s main Chinese partner, two people with direct knowledge of the matter told Reuters.
The eventual acquisition of state-owned FAW, China’s No. 2 company, comes at a time when Brilliance’s main shareholder, Huachen Automotive Group, is on the brink of bankruptcy, having defaulted on its 6.5 billion yuan ($ 1 billion).
Under the plans discussed, FAW will first buy Huachen’s 30.43% stake in Brilliance and 11.89% held by the state-owned transportation investment group in Liaoning province, the sources said. Then the carmaker will make a mandatory bid for the purchase of the remaining Brilliance shares.
To close the deal, FAW is considering setting up an offshore investment company and inviting other investors to participate, sources said, who declined to be named because the discussions were confidential. FAW and BMW declined to comment. Brilliance and Liaoning Provincial Transportation Investment Group did not respond to inquiries.
In September, Reuters reported that the Liaoning Provincial Transportation Investment Group plans to lead a consortium of Chinese state investors to take Brilliance private. However, the plan was delayed due to the difference in estimates and financial constraints, one source said.
Brilliance, based in Shenyang, the capital of Liaoning province, and BMW have a joint venture, BMW Brilliance Automotive, which accounts for almost all of Brilliance’s profits. But next year BMW plans to increase its share by another 25% for 3.6 billion euros, taking over the management of the enterprise.
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