Thu, Dec 04, 2008 - Page 11 News List

Dongfeng claims sales pitch from GM

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Dongfeng Motor Group Co (東風汽車), China’s third-largest automaker, said it had received proposals from investment banks to buy assets from General Motors Corp (GM) as the US carmaker tries to avoid running out of cash.

“We’ve gotten e-mails and investment materials asking us whether we would be interested in buying some of GM’s assets,” Hu Xindong (胡信東), head of investor relations, said by telephone yesterday. “So far, our management has not yet reviewed the issues and we have not yet responded.”

He declined to name the investment banks or the assets. GM said it was not in talks with Dongfeng.

GM is seeking a buyer for its Hummer unit and has said it will consider options for Saab and Saturn as it asks Congress for US$18 billion in aid. Dongfeng and SAIC Motor Corp (上海汽車), the country’s largest automaker, aim to add overseas brands to help boost sales outside of their home market.

“To get enough capital to invest overseas is not a problem for Chinese companies including automakers,” said Yu Bing (餘兵), an analyst at Pingan Securities Co (平安證券) in Shanghai. “But they are more and more aware of possible risks involving overseas acquisition, including issues about local legal regulation and labor union.”

“There are no grounds to these rumors” about Dongfeng looking at assets, said Henry Wong, GM’s Shanghai-based spokesman. “We do not comment on speculation in the press.”

GM, Ford Motor Co and Chrysler LLC, are seeking US$34 billion from the US government to stave off an industry collapse. Ford is exploring the sale of its Volvo unit as it focuses on its namesake brand.

Western financial companies have turned to Chinese investors for money as they seek to shore up capital eroded by almost US$1 trillion in writedown and losses triggered by the collapse of the US subprime mortgage market.

Blackstone Group LP, manager of the world’s largest buyout fund, agreed last month to allow China Investment Corp (中國投資公司), its second-largest outside shareholder, to raise its stake to as much as 12.5 percent.

SAIC paid US$116 million for the design rights of MG Rover Group Ltd’s Rover 25 and 75 models in 2005. The Shanghai-based company also owns 51 percent of South Korea’s Ssangyong Motor Co.

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