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China's Geely, Magna, held talks over Opel, Reuters reports

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This article belongs to Automotive News

China's Geely, Magna, held talks over Opel, Reuters reports

SEPTEMBER 17, 2009 12:53 CET


SHANGHAI/NEW YORK (Reuters) -- China's Geely Automobile has approached Magna International Inc. about a potential production partnership on Opel, a source familiar with the matter said, as China chases Western brands and the technology it needs to drive future growth.

Talks between the Chinese automaker and the Canadian auto parts supplier included the possibility of Geely taking a stake in Opel, but Magna is refraining from any such partnership for now, the source said.

The person declined to be identified because the talks were private.

It was not immediately clear if the Geely involved in the talks was Hong Kong-listed Geely Automobile Holdings or its non-traded privately-held parent company. But Lawrence Ang, executive director at Geely Automobile said the listed firm had never approached Magna on Opel.

Magna was not immediately available for comment. A spokesman for Opel said there was no new information on the matter

After months of negotiations, General Motors Co. agreed earlier this month to sell a 55 percent stake in car maker Opel to a group led by Magna, a deal that GM's CEO Fritz Henderson expects to be finalized next month.

Under that deal, GM will retain a 35 percent stake in Opel, with Magna and Russian state bank Sberbank each taking 27.5 percent, and workers the remainder.

The source did not say how big a stake Geely sought in Opel, but the Magna consortium plans to inject 500-700 million euros ($737 million-$1 billion) into Opel, split proportionately between the two partners.

2nd China bid

Geely, which has said its parent may bid for Ford Motor Co.'s Volvo car unit, has growing ambitions as a global player.

But analysts said Chinese automakers, already battling in their home market -- the world's largest -- against foreign brands made at local joint ventures, will struggle to manage overseas auto assets given their limited international exposure.

"I think it will be hard for Geely to have a piece of the Opel deal in the first place," said Li Mengtao, an analyst with Sinolink Securities. "Magna's already got a Russian partner and involvement from a Chinese firm will make it very complicated."

Another Chinese automaker, Beijing Automotive had bid for a stake in Opel, but conceded defeat in July after failing to agree with GM on intellectual property issues.

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