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Geely bids to buy Rover amid skepticism

This June 9 photo shows a worker fitting parts on the assembly line for the Geely CK-1 car at the Zhejiang Geely Automobile Co plant in Ningbo, China's southeast Zhejiang province. Chinese state media reported yesterday that Chinese automaker Geely group was in talks with MG Rover to buy the collapsed British car manufacturer. PHOTO: AFP

China's biggest private automaker Geely Group (吉利) yesterday said it was in talks with MG Rover to buy the collapsed British car manufacturer, but analysts argued it will have problems finding sufficient funds to secure a purchase.

"We are indeed in touch with Rover," a Geely spokesman said. "We're both interested but I don't know when we'll complete the talks, or what we might eventually end up buying."

This marks the second attempt by MG Rover, Britain's last high-volume carmaker, to find a Chinese rescuer following a decision by Shanghai Automotive Industry Corp (SAIC, 上海汽車工業) to abandon a potential deal in April.

SAIC withdrew because of worries about the financial health of Phoenix Venture Holdings, the owner of MG Rover, earlier state media reports said.

"After SAIC announced it had pulled out of the deal, Rover took the initiative to contact us," Geely chairman Li Shufu (李書福) was quoted as saying by the Dongfang Daily yesterday.

"Our biggest interest is in Rover's mature technology, which is a considerable attraction for Geely in its current stage of rapid development," he said, according to the newspaper.

Geely is not the first company in China to express such an interest. SAIC previously bought the patents for the Rover 25 and 75 models, according to reports.

MG Rover went out of business and laid off virtually all its 6,000-plus employees after the hoped-for takeover by SAIC failed to materialize.

The British carmaker, once famous for models such as the Mini and the Land Rover, had been teetering on the edge of bankruptcy since it was sold four years ago by Germany's BMW to four businessmen in central England.

Hong Kong-listed Geely, by contrast, reflects China's growing power and confidence in automobile manufacturing.

It is one of China's better-known car brands and is increasingly placing its focus on export markets, recently earmarking Malaysia as the hub for its Southeast Asian operations.

Local media have given little indication of the price for a possible purchase of MG Rover by Geely, other than saying that it may get it for less than what SAIC was asked for.

"The price MG Rover asked for is much lower than that for SAIC before," chairman Li said in an earlier interview with the Beijing Times.

Even so, MG Rover may eventually be too expensive for the Chinese automaker, which will have problems finding funds should it make a bid, analysts said.
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