Spyker Wins China Investment as Mainland Carmakers Target Overseas Brands

Bloomberg News, May 17, 2011

China car dealer Pangda Automobile Trade Co. agreed to buy a 24 percent stake in Spyker Cars NV (SPYKR), owner of cash-strappedSaab Automobile, the latest in a line of Chinese companies looking to acquire European auto brands.

Pangda, which sells 20 car brands including vehicles from Toyota Motor Corp. and Volkswagen AG’s Audi division, agreed to pay 65 million euros ($92 million) for its stake in Spyker, the Zeewolde, Netherlands-based manufacturer said in a statement yesterday.

Pangda, which raised 6.3 billion yuan ($968 million) in an initial public offering in Shanghai last month, follows SAIC Motor Corp. and Zhejiang Geely Holding Group Co. in acquiring European brands in a bid for better technology and branding.

“The Chinese have the money, they have the market and they have the ambition,” said Michael Dunne, president of Hong Kong- based auto consultancy Dunne & Co. Chinese carmakers “know no one can beat us when it comes to manufacturing, but we haven’t figured out the brand game yet,” he said.

Moves like Pangda’s allow Chinese companies to “acquire an established brand that has taken decades to build up awareness for,” Dunne said.

Spyker has been seeking a partner to help revive Trollhaettan, Sweden-based Saab, which suspended car production as of late March in a payment dispute with suppliers.

Spyker’s earlier Saab deal with Beijing-based Hawtai Motor Group fell through on May 12 because Hawtai couldn’t get government approval. A day later, the Chinese automaker blamed “commercial and economic realities” for the collapse.

Surprise Bid

Pangda, an auto dealer based in China’s Hebei province, already paid 30 million euros to buy Saab vehicles for distribution in China later this year, Spyker said yesterday.

Deliveries at Pangda last year totaled 470,000 vehicles from 926 outlets across China, according to its website.

The stake purchase by Pangda is a surprise because it has no engineering or production capacity, said Bill Russo, a Beijing-based senior adviser at Booz & Co.

“This is not a company that on the surface can offer much apart from cash that can benefit,” Russo said. “It’s a surprise because you wouldn’t expect a non-car manufacturer to be in the hunt. It shows how much interest there is for foreign assets among Chinese parties.”

Pangda’s stock rose as much as 6.7 percent today, the most in almost two weeks, and traded at 35.14 yuan as of 1:39 p.m. The benchmark Shanghai Composite Index gained 0.4 percent.

Spyker Cars gained 16 percent to 4.11 euros in Amsterdam trading yesterday. The stock has gained 18 percent this year.

Chinese Buyers

Pangda company spokeswoman Li Yan declined to immediately comment when reached by telephone today.

Booming auto sales on the mainland helped the nation overtake the U.S. as the world’s largest auto market over the last two years, generating profit that’s allowed Chinese companies to reach out to Western markets and technologies.

Zhejiang Geely bought Volvo last year in the biggest overseas acquisition by a Chinese carmaker. Geely Automobile Holdings Ltd. (175), its listed unit, had boosted car sales 48 percent and net income 35 percent to 1.18 billion yuan in 2009.

Volvo, which is counting on Chinese demand to help double sales to 800,000 vehicles in 10 years, plans to invest as much as $11 billion worldwide over the next five years to expand in emerging markets.

Rover, MG

SAIC, China’s largest domestic automaker, paid $116 million for the design rights of MG Rover’s Rover 25 and 75 models in 2005 to strengthen its own-brand vehicles. The automaker also helped restart production of the iconic MG sports-car brand in the U.K. this year.

The Chinese partner of General Motors Co. (GM) and Volkswagen AG (VOW) also paid $500 million for a 0.97 percent stake in Detroit-based GM in November.

Sichuan Tengzhong Heavy Industrial Machinery Co. withdrew its proposed acquisition of GM’s Hummer sport-utility vehicle unit, after the bid failed to win Chinese government approval.

To contact the reporters on this story: Liza Lin in Shanghai at llin15@bloomberg.net; Martijn van der Starre in Amsterdam at vanderstarre@bloomberg.net; Kim McLaughlin in Stockholm atkmclaughlin6@bloomberg.net

To contact the editor responsible for this story: Kae Inoue at kinoue@bloomberg.net

Click here to read the original article