Germans reject Chinese offer for Opel
Roland Koch, the leader of the German state of Hesse, has dismissed the possibility of Chinese auto manufacturer BAIC acquiring German carmaker Opel. Below is my translation of today’s Spiegel article explaining this.
Clear rejection of the Chinese: Hesse Prime Minister Koch has rejected the takeover offer for Opel by the car manufacturer BAIC. If someone seriously put in a word on behalf of the candidate from the Far East, it would be “an amazing thing.”
The Austro-Canadian auto supplier Magna can rely on the support of the ‘German princes’: In the takeover battle for Opel the chances of other candidates is dwindling. In a newspaper interview, Hesse Minister President Roland Koch (CDU) categorically rejected a takeover by the Chinese manufacturer BAIC.
The new European Opel could not be managed by a Chinese company, “that produces just 12,000 cars per year and do not even have the backing of the Chinese government,” Koch said to Hamburg’s Abendblatt newspaper. It would be “an amazing thing,” if anyone seriously believed in this solution.
An entry of Magna would be “the best solution, looking at the future of Opel, the locales concerned, and jobs in Germany, not least because of taxpayer money,” said Koch. Magna dealt “quite concretely with the American parent company, GM and has a big advantage over other bidders.” Koch acknowledged, however, that it is “still a long way” until Opel is rescued.
However, the opposition does not agrees with this strict interpretation of events. The chairman of the Bundestag’s budget committee, Otto Fricke (FDP), said to the “Rheinische Post”: “If the federal government does not even try and speak with the Chinese, it would be needlessly risking almost two billion euros in tax money.” While Magna, in the event of a takeover of Opel, requires guarantees by the German taxpayer in the amount of 4.6 billion euros, BAIC is requesting only 2.64 billion euros.
Even the Federation of Taxpayers urged the federal government to no longer unilaterally look at Magna. You must ensure that the best concept would be implemented for Opel and the taxpayer , said President Karlheinz Däke. Previously the CDU politician Mittelstandsbank Michael Fuchs and the Economic Council of the Union, which deals with the bidders competing with Magna, had requested re-examining the competing offers.
On the other hand, Prime Minister of Thuringia Dieter Althaus (CDU) said in the “Thüringer Allgemeine” that the decision for Magna as an investor is made. He expressed his expectation that outstanding issues will be resolved by next week. . Althaus was “surprised” about the objections raised.
This article makes clear that the GM Europe/Opel bailout and sale is very much a political event. Just Wednesday in a post about the Rio Tinto situation, I mentioned that the Germans should handle the Chinese bid with care lest they be rightfully accused of protectionism.
Apropos protectionism, the German government has now confirmed an official bid for automaker Opel by a Chinese car company, Beijing Automotive Industries (BAIC). As the Chinese have become noted of late for being the high bidder, I suspect BAIC has put in a good offer. (Update 920ET: The Telegraph puts this offer at €660 million for all of GM Europe including Vauxhall) To be sure, the Austrian-Canadian auto parts maker Magna is on the verge of finalising its bid. Nevertheless, the Germans are going to need to treat the Chinese bid with diplomatic aplomb. We have already seen enough protectionism against Chinese companies. Another slight of this nature would be proof positive that Chinese money is considered no good for buying top-tier western companies.
While some had conjectured that the BAIC bid is really a Chinese government bid, the Chinese automaker has no backing from the Chinese government, as Roland Koch alluded. Koch claims this is a negative, but he is just rationalizing his decision to dismiss the bid out of hand. In truth, the lack of involvement of the Chinese government would be seen as a good thing to most concerned parties.
The fact is the Chinese have put a superior offer to Magna’s on the table. But, because of protectionism, this offer has zero chance of being accepted by the Germans.
Koch lehnt chinesischen Einstieg bei Opel ab – Der Spiegel