General Motors Corp may get a fourth offer for its Opel and Vauxhall operations in Europe after a Chinese carmaker submitted an expression of interest on Thursday, according to two people familiar with the matter.
The Chinese company sent a letter a day after the May 20 deadline for bids, said the people, who declined to be identified because the negotiations are private. A specific offer may not materialise, said the people, declining to name the company.
GM has said that Opel needs ¤3.3 billion ($4.6 billion) in state aid to survive. The carmaker is selling a majority stake in its European operations while preparing for a probable June 1 bankruptcy. The unit attracted bids from Italian carmaker Fiat SpA, Canadian auto supplier Magna International Inc. and RHJ International SA, a buyout firm with automotive assets, including former holdings of private-equity firm Ripplewood Holdings LLC.
“The risks are huge” for a potential Chinese bidder, said Yu Bing, an analyst at Ping An Securities in Shanghai. “Chinese carmakers aren’t big or experienced enough and lack the technology and management skills to buy something like Opel.”
Thomas Steg, a spokesman for Chancellor Angela Merkel’s government, told journalists in Berlin today that he had no information on a potential offer from a Chinese bidder.
The bids from Magna and RHJ include cash, while Fiat’s offer requires ¤7 billion of financing to reorganise Opel, the people said. Fiat’s bid has two parts: an offer for the Opel and Vauxhall units, and an alternative plan to also buy GM’s operations in Brazil and Argentina, one of the people said. SAIC Motor Corp, China’s biggest carmaker, declined to comment. Chongqing Changan Automobile Co Ltd spokesman Zhang Baojun said it had not submitted an expression of interest for Opel. Dongfeng Motor Group Co spokesman Hu Xindong and Geely Holding Group Co spokesman Zhang Xiaodong said they were unaware of any bid.
Chery Automobile Co spokesman Jin Yibo was not available for comment.
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Roland Koch, the premier of the state of Hesse, where Opel’s headquarters are located, said today in an interview on public-radio network Deutschlandfunk that Magna’s offer is “closest to the hopes and desires of many in German politics and among workers.”
Fiat Chief Executive Officer Sergio Marchionne has said he wants to create a new company that combines Fiat’s auto unit with Chrysler LLC, GM Europe and possibly GM Latin America. Intesa SanPaolo SpA, UniCredit SpA and Goldman, Sachs & Co. will be the global coordinators for the initial public offering of that automaker, Fiat said in a statement.
The statement didn’t specify whether the banks will provide financing needed to close the transaction. Gualberto Ranieri, a spokesman for Fiat in Turin, Italy, declined to comment.
Marchionne has said his bid for Opel wouldn’t require cash. He would offer “100 per cent of Fiat’s auto unit clean of debt and assume Opel debt,” he said in a May 6 interview.
GM Europe CEO Carl Peter Forster said last week that Magna’s interest in Opel was to increase sales in Russia.
Magna’s focus on Russia would play on Opel’s growth in the country and help it accelerate, Forster said. Opel could leverage manufacturing in St Petersburg and in Uzbekistan with a Russian partner and Magna.
RHJ gets more than two-thirds of revenue from sales of automotive parts. The company is led by CEO Leonhard Fischer, who joined in 2007 from Credit Suisse, where he was head of European operations.
OAO GAZ, the carmaker controlled by billionaire Oleg Deripaska, said May 12 that it wants to start producing Opel cars in Russia with Magna if the Canadian parts maker acquires the GM brand.
GM is trying to cut $1.2 billion in costs to secure Opel’s survival, and CEO Fritz Henderson said May 14 that he intends for any bidder to retain a technology-sharing relationship with the Detroit automaker.
“These are the kinds of cost-saving opportunities that GM really needs and they didn’t have in the past,” said Rebecca Lindland, a forecaster at IHS Global Insight Inc in Lexington, Massachusetts.
Opel, maker of mid-sized Insignia sedan, will get ¤1.5 billion in bridge loans from German federal and state governments, according to Juergen Reinholz, economy minister of the state of Thuringia. The German government will contribute 750 million euros and the four states with Opel factories will provide the remainder, he said on Thursday. Opel also operates in the UK, Spain, Poland and Belgium.
Arnaud Denis, a spokesman for RHJ, declined to comment. Renee Rashid Merem, a spokeswoman for GM in Detroit, Opel spokesman Frank Klaas, and Daniel Witzani, a spokesman for Magna in Europe, couldn’t immediately be reached.
Opel, identified by its lightning-bolt trademark, began as a manufacturer of sewing machines in 1862 and became a carmaker before GM bought it in 1929.