Friday, March 6, 2009

Leaks on Beijing Auto Pursuit of Chrysler Assets

This was a big story about ten days ago, but the chatter has since died down. As with all of these types of stories, the participants deny them until they either happen, or something else takes place that precludes the possibility.

The Economic Observer Online is now reporting more specifics on the potential for a purchase of certain Chrysler assets by Beijing Auto, a local state-owned automaker that makes Hyundai, Mercedes and a few local brands.

News sources reveal ("消息人士透露") that the city government of Beijing will extend to Beijing Auto funding of up to 10 billion RMB (about $1.4 billion). Five billion will be used to buy Fujian Auto, a company that already makes some Chrysler models in China, including the Grand Voyager minivan. (Rumors of the Fujian purchase -- also subsequently denied -- surfaced several weeks ago.)

The remaining five billion RMB will be used to "buy seven Chrysler models, a research and development center, and an engine assembly line..."

The story also lists the names and positions of the individuals on Beijing Auto's merger and acquisition leadership committee.

Such details do not appear out of thin air. If these transactions do not ultimately happen, apparently it will not be for lack of trying.