BAIC's Plan for Opel

As things begin to hit up for Magna, with the Chinese from BAIC breathing down their necks, more and more details about what the Chinese are planning to do with Opel start to surface. We are covering this not because we have a thing for Chinese companies but because Magna is now in the same spot where Fiat was a few months back: leading the race for Opel. Remember that Fiat, in the end, lost the battle.

According to reports coming from all over, including from BAIC's non-binding offer obtained by Reuters on Tuesday, BAIC is offering 660 million euro for Opel, while asking 2.64 billion euro from Germany. GM will be left with a 49 percent stake in the company and with the prospects of supplying BAIC with technologies and parts until 2015.

"Beijing Auto will use financing from the (sole shareholder) Beijing Municipal Government to fund the equity need of 660 million euros," the Chinese said. By that time, BAIC plans to reach a nearly half a million units threshold in China. To do this, they plan on building no less than 400 Opel dealerships in the country, in addition to the building of an Opel plant.

"As you may know, industrialization of a developing country such as China needs to have access to intellectual property. This is a top priority for the Chinese government. ... This is the key driver to Beijing Auto's potential acquisition of Opel NewCo," BAIC's offer to GM states.

For the time being, BAIC is being regarded as the next best thing. Still, with the promise of more GM involvement, less aid demanded and fewer job cuts, their offer has already made GM say it is "formidable". Magna may have celebrated too soon...
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About the author: Daniel Patrascu
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Daniel loves writing (or so he claims), and he uses this skill to offer readers a "behind the scenes" look at the automotive industry. He also enjoys talking about space exploration and robots, because in his view the only way forward for humanity is away from this planet, in metal bodies.
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