Scelte Strategiche Gruppo FAW

China's FAW considers acquiring BMW partner Brilliance for about $7B, report says

FAW Group is looking at acquiring Brilliance China Automotive Holdings for about $7.2 billion in a two-stage deal that would see BMW's main Chinese partner taken private, two people with direct knowledge of the matter told Reuters.

The potential acquisition by state-owned FAW, China's No. 2 automaker, comes at a time when Brilliance's top shareholder Huachen Automotive Group is on the brink of bankruptcy, having defaulted on 6.5 billion yuan ($1 billion) in debt obligations late last year.

Under plans being discussed, FAW would first purchase 30.43 percent of Brilliance owned by Huachen and 11.89 percent held by the state-controlled Liaoning Provincial Transportation Investment Group, said the sources.

It would then make a mandatory bid for the rest of Brilliance's shares. It is considering offering about HK$11 per share for both stages of the deal, representing a 70 percent premium to its average share price over the past month of HK$6.48.

To conduct the deal, FAW is looking at setting up an offshore investment vehicle and is inviting other investors to participate, said the sources, who declined to be identified as the discussions were confidential.

FAW and BMW declined to comment. Brilliance and Liaoning Provincial Transportation Investment Group did not respond to requests for comment.

Huachen said the information was false but did not elaborate. Liaoning province's state asset regulator, which owns a majority stake in Huachen, said it has not been in contact with FAW about a potential take-private deal for Brilliance.

(Reuters)