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Beijing Auto studies options after partner drops Saab bid

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Beijing Auto studies options after partner drops Saab bid

NOVEMBER 25, 2009 06:46 CET

SHANGHAI/HONG KONG (Reuters) -- China's Beijing Automotive Industry Holding Corp., part of a group that abandoned its bid to buy General Motors Co.'s Saab unit, could still bid for some Saab assets on its own but is unlikely to try for the whole company, analysts said.

BAIC must decide its next move after its consortium, led by Koenigsegg Group AB, pulled out of talks to buy Saab, putting in doubt the future of the money-losing GM unit. Koenigsegg Group is a consortium of private investors including tiny Swedish luxury car maker Koenigsegg Automotive AB.

BAIC said in a statement on Wednesday it was reviewing its options and reaffirmed its commitment to become more global.

"Beijing Automotive Industry Holding Corp. states that becoming more international ... has always been our strategic focus," the company said in a statement.

"With regard to Koenigsegg's withdrawal, we will carefully evaluate this project anew and make appropriate arrangements," BAIC said.

Sweden effectively ruled out a state bail-out of Saab, saying a private owner was the company's only chance to survive.

BAIC has been in the market for foreign car brands and intellectual property, but is less interested in the more complex proposition of running a troubled manufacturing operation outside its home market, analysts said.

Therefore, they say BAIC is unlikely to come back and make a solo bid for all of Saab.

Interesting platforms

"The pullout of Koenigsegg may not be a chance for BAIC as it seems to be," said Zhang Xin, an industry analyst with Guotai Junan Securities. "It's true that BAIC does not have its own car brand and it's desperate to get the technology, but it might not get it."

BAIC could still return to the table if it sees a chance to selectively buy some of the Saab assets it wants, in particular some of its older product designs, said Boni Sa, an analyst at CSM Worldwide.

"I think BAIC might give it a try if it has a chance to get the old Saab 9-5 and 9-3 platforms," Sa said. "Even though the technologies are a bit outdated, they're better than nothing for BAIC."

China's relatively cash-rich automakers have shown an increasing interest in overseas purchases recently, looking to pick up global brands and technology at bargain prices as the world's auto industry undergoes a major retrenchment.

Ford Motor Co. is in talks to sell its Volvo unit to the parent of China's Geely Automobile. Earlier this year, Sichuan Tengzhong Heavy Industry, an obscure Chinese maker of heavy industrial equipment, surprised the world with its successful bid to buy GM's Hummer brand.

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BAIC's interest in platforms would amount to a liquidation scenario.

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