MG Rover tries to resurrect SAIC merger
By Yu Qiao (China Daily)
Updated: 2005-04-12 13:43

The administrators of MG Rover, the bust British car maker, are trying to resume rescue talks with Shanghai Automotive Industry Corp (SAIC), China's No 1 car group.

"We now seek to engage in discussions with SAIC as soon as possible," Tony Lomas, a partner at PricewaterhouseCoopers, said yesterday.

PricewaterhouseCoopers was named administrator of MG Rover last Friday when the last major independent car maker of the United Kingdom went bankrupt as it failed to reach an agreement with SAIC due to disputes on a merger price.

The British Government has decided to offer an emergency loan of 6.5 million pounds (US$12.3 million) to stave off redundancies for a week.

Analysts said yesterday that the acquisition of MG Rover will be worthwhile for SAIC as long as the price is reasonable, but there are risks.

"MG Rover's engineering capability would be very good for SAIC which is eager to develop own-brand cars if the deal could be realized at an acceptable price," Yale Zhang, from United States auto consulting firm CSM Worldwide Corp, told China Daily.

SAIC is often criticized by Chinese industry observers because of its lack of development capability and brands, although it is the biggest and most profitable car maker in the country.

The company, partners of US-based General Motors and Germany's Volkswagen in China, aims to produce 50,000 own-brand vehicles annually by 2007.

"SAIC's courage should be praised. Chinese automakers will go abroad aggressively sooner or later," said Li Chunbo from CITIC Securities Co Ltd, a Chinese securities firm.

SAIC has become the vanguard in China's auto industry in terms of overseas mergers and acquisitions.

Last October, SAIC bought a 48.9 per cent stake in South Korean automaker Ssangyong Motor for US$500 million.

In 2002, SAIC acquired 10 per cent of GM Daewoo Automotive & Technology Co Ltd, General Motors' venture in South Korea.

"However, the merger with MG Rover would bring about risks for SAIC as Chinese automakers remain very weak particularly in overseas corporate management," Li said.

"There are many uncertainties in MG Rover's future," he added.

SAIC sold more than 800,000 vehicles last year, more than half of which came from its joint ventures with General Motors and Volkswagen.

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