FAW Group, Brilliance Auto in merger talks

Shanghai, June 17 (Gasgoo.com) FAW Group and Brilliance Auto are in talks for merger and restructuring, and FAW is expected to buy controlling stake in Brilliance, the 21st Century Business Herald reported today, citing sources familiar with the matter.

"This matter has not taken shape yet," a planning executive of FAW Group said to reporters, not denying the merger talks news. Actually, Brilliance Auto, BMW's partner in China, was approached in August 2008 about a possible takeover by larger rival FAW Group, though they later denied having any discussions about a merger.

Eight years ago, FAW Group sold its controlling stake in Jinbei Auto to Brilliance Auto, and now the Chinese auto giant plans to buy back the "Gold Cup" (Jinbei). FAW aims to take over Brilliance Jinbei, which makes self-developed Brilliance Zhonghua sedans (BS6 and BS4), with an eye to eventually buying the parent group Brilliance Auto.

Brilliance Chairman Qi Yumin has said that he would not oppose a takeover deal if it could help the group to shore up its own vehicle brands. "We have laid out our development scheme and we are working hard on it," he was previously quoted as saying.

A takeover of Brilliance would mark another major step toward consolidating China's fragmented auto industry, after market leader SAIC Motor's acquisition of Nanjing Auto, and Guangzhou Auto's restructuring of Changfeng Motor.

The Chinese government has been encouraging mergers and acquisitions among its auto industry's more than 100 players, aiming to create a few national champions able to compete with global giants at home and overseas.

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