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Beijing Auto Withdraws Opel Bid

07-24 11:55 Caijing

Beijing Auto was the high bidder in the Opel auction with an offer of 660 million euros.

By staff reporter Liang Dongmei

(Caijing.com.cn) Beijing Automotive Industry Holding Co, China's fifth-largest automaker by sales, has withdrawn its offer for GM's Opel brand after failing to reach an agreement over the transfer of Opel's intellectual property rights, a Beijing Auto official told Caijing on July 23.

GM has said only that it will go forward with the two other bidders, Canadian auto parts maker Magna International and RHJ International, a Brussels-based investment company, without giving a reason for excluding Beijing Auto. Magna has won the endorsement of the German federal government.

Beijing Auto, the Chinese joint venture partner of Daimler AG and South Korea's Hyundai Motor, was the high bidder in the Opel auction with an offer of 660 million euros. It also offered GM the prospect of retaining 49 percent stake, the most of any of the bids, while asking the German government for the lowest loan guarantee of 2.6 billion euros.

The failure of the Beijing Auto bid reflects lingering skepticism over Chinese automakers' lack of international operating experience and their ability to successfully integrate large foreign acquisitions. Beijing Auto's focus on technology transfer also likely roused the suspicions of the German government and unions, whose main interest is preserving jobs in Europe. A successful Beijing Auto bid for Opel would also likely have complicated GM's operations in China, where its main partner is SAIC.

Beijing Auto has been linked with bids for car brands being discarded by restructuring major automakers, including Volvo and Saab. The frenzy of bid activity suggests a desire to expand rapidly in order to qualify as a "national champion" in China's auto industry consolidation. China wants to shrink its car industry to a maximum of three automakers with capacity of 2 million units a year by 2011 and a maximum of five automakers with annual capacity of 1 million units

Beijing government-owned Beijing Auto is the parent of Beiqi Foton Motor Co. Ltd. (SSE: 600166).

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Full article in Chinese: http://www.caijing.com.cn/2009-07-24/110213584.html

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