Special: China’s FAW considers obtaining BMW associate Brilliance in $7.2 billion offer

By Julie Zhu

(Reuters) – FAW Group is searching at getting Brilliance China Automotive Holdings Ltd, BMW’s key Chinese partner, in bargains that could charge it some $7.2 billion and then consider it private, two persons with immediate expertise of the subject advised Reuters.

Brilliance shares soared as considerably as 25.6% to HK$7.99 following the news.

The prospective acquisition by point out-owned FAW, China’s No. 2 automaker, arrives at a time when Brilliance’s prime shareholder Huachen Automotive Group is on the brink of personal bankruptcy, acquiring defaulted on 6.5 billion yuan ($1 billion) in credit card debt obligations late last year.

Less than strategies currently becoming discussed, FAW would initial invest in 30.43% of Brilliance owned by Huachen and 11.89% owned by the state-managed Liaoning Provincial Transportation Investment decision Team, explained the resources.

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It would then make a mandatory bid for the relaxation of Brilliance’s shares. It is taking into consideration presenting about HK$11 per share for the two-phase offer, symbolizing a 70% premium to its common share cost around the previous month of HK$6.48.

To carry out a deal, FAW is hunting at setting up an offshore expenditure automobile and is trying to get other traders, reported the resources, who declined to be recognized as the discussions ended up private.

FAW and BMW declined to remark. Brilliance, Liaoning Provincial Transportation Expense Team did not right away answer to requests for remark.

Huachen reported the data was false but did not elaborate. Liaoning province’s point out asset regulator, which owns a greater part stake in Huachen, also did not quickly react to a request for comment.

Reuters reported in September that Liaoning Provincial Transportation Expenditure Group was arranging to guide a consortium of Chinese state-backed traders to choose Brilliance personal. However, the prepare has been place on maintain because of to discrepancies in valuations and financing problems, explained a person of the persons.

(Reporting by Julie Zhu Added reporting by Yilei Sunshine Editing by Edwina Gibbs)