China’s FAW Group is in talks to acquire BMW partner Brilliance China Automotive Holdings Ltd. Despite no further comments from the mentioned companies, Brilliance noted a significant surge in shares.
FAW plans to take over Huachen’s shares in Brilliance
An exclusive report from Reuters today revealed that FAW Group plans to acquire BMW main Chinese partner taken private. Two sources told Reuters that the acquisition will proceed through a $7.2 billion two-stage deal. FAW Group plans to take over 30.43% of Brilliance shares owned by Huachen Automotive Group and another 11.89% from Liaoning Provincial Transportation Investment Group.
Huachen itself is Brilliance’s top shareholder. However, the company is on the verge of being bankruptcy. Last year, Huachen is reported to have around 6.5 billion yuan ($1 billion) of defaulted debt obligations. Prospective investors think that this problem might affect Huachen, causing the company to become undervalued.
Meanwhile, Brilliance will put the rest of its shares on a mandatory bid. As of now, the offering will come around HK$11 per share for both stages of the deal. Offshore investment vehicle and other investors are welcome to participate in the deal, sources told Reuters.
Neither FAW, BMW, Brilliance and Liaoning Provincial Transportation Investment Group gave comment upon Reuters‘ exclusive news.
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