The mergers and acquisitions market could not escape influence of the global financial crisis, and that influence affected not only cost and amount of the M&A transactions but the procedure of conclusion of a transaction and its characteristics. The total amount of transactions reduced, which can be explained by a high degree of uncertainty about prospects of economic growth, decrease in readiness of investors to assume financial risks, underfinancing, caused by liquidity crisis, and a huge difference in price outlooks of sellers and buyers. At the same time a number of acquisition agreements increased, at that the company purchased turned bankrupt or is under external management.

Automakers all over the world are now having trying times. Automotive sales keep falling rapidly in the background of the global crisis aggravation. As a result of the general uncertainty in economics a number of the M&A transactions in the automotive industry and their cost decreased. According to the data by PricewaterhouseCoopers “Survey of the M&A Transactions in the Automotive Branch”, after the period of extraordinary high activity in the M&A market in 2007 the volume of transactions concluded reduced by 9 % and amounted to 549 operations a year in 2008 as compared to 604 operations in the previous year.
According to the results of the last year, declared value of transactions decreased by 45 %, o 31.6 bln. US dollars against 57.1 bln. dollars of 2007. Because of lack of available financing buyers had to stand on the sidelines or to change the strategy and conduct less significant transactions.

In 2008 absence of major transactions was perceivable. The total cost of five most significant transactions in the automotive industry amounted to 16.3 bln. US dollars against 33.0 bln. US dollars of the previous year. Nevertheless, 13 operations of the more than 500 bln. US dollars were conducted, which, as a whole, accounted for 72 % of the total declared value.

The largest transactions, based on the strategy of consolidation and expansion in the market, were concluded, for the most part, in Europe. For example, purchase of a 30 % share in the Sweden Scania by Volkswagen AG and purchase of Jaguar Land Rover by Indian Tata Motors.

Among major Russian transactions in 2008 there is buying by Renault a 25 % stock of OAO AVTOVAZ shares, and purchase by German strategic investor Daimler AG of a 10 % share in OAO KAMAZ stock capital of the 250 bln. US dollars total cost.
Upon the whole, in 2008 investments in the automotive industry accounted for only 17 % of the global cost of automotive transactions, against 44 % in 2007 and 54 % in 2006.

A shift from strategic agreements to buying of distressed assets became a key tendency this year. Among other most significant trends of the year, there are:
– growth in a number of public private partnerships;
– acquisition and compulsory acquisition of non-core assets;
– increase in a number of transactions on purchasing of debtor and bankrupt companies;
– increase in mergence transactions. Owners of a company, which is on the verge of bankruptcy, receive shares of stronger competitors but lose control over their company.

And the worst news is disastrous increase in a number of bankrupt companies and companies which are on the brink of bankruptcy. During the last seven years a number of bankrupt companies have reached a record-breaking value. The most major financial turmoil took place in developed markets of the USA, Canada and Japan. By the total amount of transactions related to bankruptcy the USA is a predictable leader with General Motors and Chrysler LLC driving this tendency. Upon the whole the situation in the market can be described in two words, restructuring and optimization.

Analysis of the M&A transactions in the automotive branch gives a rather complete idea about influence of the crisis on the development of the global M&A market and the global automotive industry upon the whole.

10 Key M&A Transactions in the World Automotive Industry, 2008.

Rating	Transaction volume, bln USD	Target company		Buying company		Acquired share, %
		Name	Регион	Name	Region
1	5145	Volkswagen AG	Germany	Porsche Automobile Holding SE	Germany	12
2	4378	Scania AB	Sweden	Volkswagen AG	Germany	17
3	2300	Jaguar Cars Ltd & Land Rover	Great Britain	Tata Motors Ltd.	India	100
4	1166	ОАО AVTOVAZ	Russian Federation	Renault SA	France	25
5	590	Ducati Motor Holding SpA	Italy	Performance Motorcycles Spa	Italy	71
6	336	Volvo AB-Indian Truck, Eicher CV Division	India	Volvo Eicher Commercial Vehicles Ltd.	India	100
7	306	Fuji Heavy Industries Ltd.	Japan	Toyota Motor Corp	Japan	8
8	285	Nanjlng Automobile (Grp) Corp.	China	Shanghai Automotive Co Ltd.	China	100
9	250	ОАО KAMAZ	Russian Federation	Daimler AG	Germany	10
10	127	Chrysler LLC-Tritec Motors plant	Brazil	Fiat Powertrain Tech Srl	Italy	100

Source: PricewaterhouseCoopers Automotive M&A Insights

Completed Transactions

Toyota – Fuji Heavy Industries (FHI)

The transaction concluded between Toyota Motor and Fuji Heavy Industries, which is a direct manufacturer of Subaru vehicles, has long prehistory. In October, 2005 Toyota bough 8.7 % Fuji Heavy Industries shares from General Motors. During the following two years the Japanese company increased its share in FHI to 9.5 %, but in April, 2008 only, when a new revision of the antimonopoly law was introduced in Japan, Toyota increased it to 16.61 %, paying more than 31 bln. yen (about 306 mln. US dollars) to FHI.

Now Toyota can exploit technologies and production facilities of Subaru. Both companies in 2005 announced heading for synergetic co-operation, but there are still few fruits of their team-work. By joint efforts manufacture of Toyota Camry on the Subaru plant in the USA was launched, and a joint design engineering bureau is now developing a light rear-drive Subota sport car, which is planned to start sales in 2010-2011. There is no more information about further plans of Toyota on increase in its share in Subaru.

Volkswagen – Scania

Volkswagen AG concern purchased shares of Swedish truck and bus manufacturer in 2000 for the first time after an unsuccessful effort of Volvo to buy Scania. In 2007 Volkswagen AG increased its interest in Scania to 37.98 % voting shares, on March 3, 2008 it declared about intention to acquire 30.62 % more, buying in all available shares of other two largest shareholders of Scania, the Investor AB investment company and the Wallenberg fund. It took European Commission, which was checking this transaction for fairness from the antimonopoly point of view, more than three months to come to a positive conclusion. And there had been many causes for doubts.

Volkswagen is the largest in Europe manufacturer of passenger vehicles of different classes, from compact hatchbacks to executive sedans and extra expensive sport cars (Audi, Bentley, Bugatt, Lamborghini, Seat, Skoda, Volkswagen brands). From this point of view, intention of the concern to gain control over a truck-producing company was not questionable. But on the other hand Volkswagen had a 29.9 % share in MAN, which was a direct competitor of Scania. Certainly, European Commission did not want allow mergence of those two companies. It should be reminded that in 2006, when MAN made an effort of a hostile take-over of Scania, the transaction was stopped because such alliance could gain control over too significant market share, which will have a negative effect on free competition.

The situation was complicated by the fact that in January, 2008 MAN AG, which already had 15.6 % Scania AB voting shares, increased its stock to 17 %. Beside, the fact that Volkswagen had its own LCV production, heavy trucks included, in Brazil was not passed over. All that in total put the anti-monopoly committee on the alert. There were different scenarios of the transaction: from establishment of a huge conglomerate (Volkswagen+MAN+Scania) to split-up of one of the companies and selling of its non-core assets in parts.

For three months the question of acquisition of Scania by Volkswagen had been open, but finally, European Commission approved the transaction: the transaction can be completed, which was announced on June 13, 2008. It was said in the official press-release that after a check of the global activity of Volkswagen Group and Scania experts for anti-monopoly policy came to the conclusion that the transaction would not be a serious obstacle for effective competition in European economic area (EEA) upon the whole or in its significant parts.

Volkswagen which is the owner of a heavy truck and bus department in Brazil, in Germany is just a minority shareholder (which has no controlling interest) in MAN Nutzfahrzeuge so it cannot control activity of the last. MAN Nutzfahrzeuge, in its turn, has only 17 % shares in Scania, which can provide it with control over the Swedish company either.

The check also indicated that in the major activity Volkswagen Group and Scania do not meet: the German concern produces, mainly, passenger vehicles and LCV, and the Swedish company is not presented in this sector at all. In Brazil business of the Volkswagen Group is limited by Central and Latin America. For Scania which specialize in production of buses and trucks of the gross weight of more than 16 tons, the major sales market is located in Europe. However, as it was noted by the European Commission, Scania and MAN has overlapping production of diesel engines for industrial use and application on sea transport. But taking into account insignificant volume of this production it cannot be considered questionable.

As a result, on a pro forma basis Swedish Scania lost independence: at present time control and management of the company has been transferred to the Germans, who accumulated more than 85 % of voting shares (68.6 % are held by Volkswagen, 17 % – by MAN). Volkswagen business interest in Scania increased from 20.89 % to 37.73 %. The amount of transaction amounted to nearly 4.38 bln. US dollars (about 3 bln. euros).

Tata Motors – Jaguar Land Rover

At the end of March, 2008 American Ford Motor Company announced consent on sale of Jaguar and Land Rover brands, owned by the automotive concern to Tata Motors Ltd., which is the largest Indian car and LCV producer. It is noticeable, that beside Tata Motors there were two more claimants upon predeterminedly lossmaking brands, an Indian automaker, Mahindra & Mahindra Ltd. and a group of private American companies (One Equity Partners, Ripplewood and Texas Pacific Group).

According to observers, Tata Motors won because it managed to give Ford guarantees, which it accounted for: not to split up the Jaguar Land Rover Group, and to maintain it the current state, as “ synergy of the two brands is a security for their further survivability”. Trade unions, which approved business plan of the Indian company for the nearest five years, providing further development of the brands and sales growth (there was no single word about job cut in the long view), also supported Tata.

The transaction of the 2.3 cost was completed at the beginning of June, 2008 and included proprietory rights for Jaguar Land Rover which provided perpetuity for all rights on intellectual property, plants, teo design engineering bureaus in Great Britain and also on national trading companies all over the world.

Pursuant to the agreement signed, for the transitional period Ford undertook to provide the new owners with IT, accounting system and testing facilities. Besides, long-term agreements covered engines, die stamping and other component parts of Jaguar Land Rover.

With purchasing of the two world-known executive brands Tata Motors hoped to increase its status of a carmaker, but after the transaction had been completed, the management of Tata Motors had to strike for financing, because the global credit crisis and economic downturn significantly reduced cash funds of the company. Share stocks, offered last year, did not interest buyers, which affected plans of the Indian automotive giant to organize additional issue of shares with international placement. Resources were needed for restructuring of the 3 bln. dollars debt, which arose from purchase of the British brands.

At present time Tata Motors is suffering serious financial problems. According to the results of 2008-2009 financial year, the Indian automaker got more than 25 bln. rupees (520 bln. US dollars) of net loss (against 21.68 bln. rupees of net profit, received the year before). Out of this sum Jaguar and Land Rovet lossmaking operations account for 463 bln. US dollars, the companies to be on the balance of Tata for ten months of twelve of the period under review. That is why the Indian concern intends to continue redundancies in its British holdings, and also to shut down several plants. At the same time Tata Motors, which has in its model lineup one of the cheapest vehicles in the world, Nano, alongside with premium brands, informs that it managed to prolong the time of the debt repayment by 18 months, up to the end of 2010.

Daimler – КАМАZ

Information about possible sale of 42 % of ОАО КАМАZ shares to German Daimler AG appeared in summer 2008. At that time the transaction was evaluated at 2 bln. US dollars. But the global financial crisis made its allowances, and, as a result, Daimler decided to confine to purchase of a 10 % stock, which practically does not give any rights to German automaker as a shareholder, but, nevertheless, maintains the possibility to increase a share in the Russian company in the future in the event of improvement of the financial situation.

A formal statement from Daimler about its intention to acquire a share in ОАО КАМАZ was made on December 5, 2008; the anti-monopoly department of Germany promptly agreed on the application, and on December 12 already Daimler AG, ОАО КАМАZ, Troika Dialog investment company and Rostekhnologii state corporation, which represents interests of the state in this transaction, signed an agreement on strategic partnership.

According to an official report, the sum of the transaction amounted to 250 bln. US dollars. In 2012, under the condition of positive results of business and financial performance of OAO KAMAZ (evaluation includes such indices as sales level and profit), an additional payment of 50 bln. US dollars will be made. Daimler, in its turn, got one place in the board of directors of the Russian automotive giant.

The partnership is intended for transfer of modern technologies and work on new projects. Particularly, all technical data on truck assemblies and units, Mercedes-Benz Actros cab of the second generation included, will be transferred to Naberezhnye Chelny. Speaking about details of co-operation with Daimler AG, the general director of КАМАZ Sergey Kogogin reported that contract assembly of Actros is planned. In prospect projects on Mercedes-Benz bus assembly are possible. Meanwhile, assistance of the Russian automotive giant in the sphere of service and sales of Mitsubishi Fuso trucks (this brand is also owned by the German concern) in Russia is on the agenda.

Co-operation with КАМАZ provides Daimler Trucks subdivision of Daimler AG concern with a possibility to strengthen positions in the Russian market within the strategic program for BRIC countries (Brazil, Russia, India and China), which has been successfully realized by Daimler Trucks for four years. The strategy is based on market principles: operational quality improvement, unlocking of the market potential and search for new markets, and also development of new products and technologies.

At present, nominal capital of ОАО КАМАZ amounts to 35.361 bln. roubles: 44.4 % of shares are controlled by Troika Dialog investment company (management option is included in this stock), 37.8 % are owned by Rostekhologii state corporation, 10 % are held by Daimler. Besides, KAMAZ has a lot of minority shareholders (more than 76 thous. individuals).

Renault – AVTOVAZ

In December, 2007 already information about plans of French Renault automotive corporation to purchase a blocking share holding of OAO AVTOVAZ appeared. The transaction was concluded on February 29, 2008, a share sales agreement was signed by the head of the Troika Dialog IC board of directors Ruben Vardanyan, the president of Troika Capital Partners Sergei Skvortsov and the head of the Renault-Nissan corporation Carlos Gon. The final sum will depend on the results of AVTOVAZ operating in 2008-2009, but it will not exceed 1.2 bln. US dollars. At present, the major shareholders of OAO AVTOVAZ are Renault, the Rostekhnologii state corporation and the Troika Dialog IC, each of them has 25 % and one share.

After acquirement of a blocking share holding of the plant by the French automotive corporation, four representatives of Renault entered the board of directors of OAO AVTOVAZ, but in June, 2009 already all of them left the Russian enterprise. According to a number of experts, leave of Renault executives can mean reconsideration of the development concept of the plant, which less and less associates its future with the French concern. The company itself explains redundancy with “optimization of the management structure, intended for reduction of administrative cost”.

Chrysler – Fiat

On April 30, 2009 Chrysler LLC made a bankruptcy petition in accordance with article 11 of the USA bankruptcy law. This article makes it possible for companies to carry out the procedure of reorganization remaining in business. In arrears Chrysler has shut down 22 plants in the USA. The only offer on buying of shares was received from the Italian Fiat SpA automotive concern.

The agreement was planned to be concluded till June 15, but Chrysler’s creditors from among pension funds, which at their time provided the concern with 42 bln. US dollars of secured loans could block signing of the agreement by the parties. They were dissatisfied with the current scheme of reorganization which provides unsecured creditors with illegitimate privileges. The planned transaction was called “contradicting to the United States Constitution” by the funds.

The decision of the bankruptcy court of the South district of New York, which declined the petition of pension funds and agreed on transfer of the Chrysler’s assets to the Italian company, facilitated conclusion of the transaction between two companies. As it was remarked in the court, any delay invites ‘significant costs’, ‘loss of highly experienced personnel’, reduction in a number of suppliers and dealers of the company, and ‘erosion of consumer confidence’.

As a result, at the beginning of June, 2009 already American Chrysler and Italian Fiat completed the merger transaction. Subject to the agreements signed 20 % of the American company passed to Fiat. At that, in prospect, a share of Fiat can increase to 35 % under fulfilling of certain conditions. However, the Italian company will not receive the majority stock in Chrysler Group until all finances invested to support financial condition of Chrysler are returned to American taxpayers.

Besides, 55 % of the shareholders capital were transferred to the company, representing interests of amalgamated trade unions of workers in the automotive industry of the USA and Canada, VEBA (Voluntary Employee Beneficiary Association). Other 8 % and 2 %, passed to the governments of the USA and Canada, respectively, which gave Chrysler multibillion credits for negotiation of consequences of the economic crisis.

Actually, Chrysler LLC, the bankrupt American automaker, officially sold out nearly all assets to a new company, which will operate under the name of Chrysler Group LLC. Alliance will make it possible for Chrysler and Fiat to fully optimize their production facilities and the global procurement base, at that both companies will acquire access to new sales markets. Fiat engines and component parts will also be manufactured on the Chrysler plants.

Sergio Markionne, the head of fiat, was appointed CEO of Chrysler Group, and upon the whole the new company will be managed by nine members of the board of directors, out of which three will be appointed by Fiat, four – by the American government and other two – by the government of Canada and VEBA, respectively. New structure of the company is based upon the principle of area division with full responsibility for each brand separately. The general commercial, technical and corporate functions are intended for support and development of production and sales of Chrysler, Jeep, Dodge automotive brands and Mopar spare parts. The object of the new organization structure is maintenance of the brands’ image and integrity of the dealer network.

Shonapol – IzhAvto

The management of the SOK Group adopted a principal decision to sale the controlling interest in OAO Izh-Avto in 2006. Then there were several claimants upon acquisition, OAO AVTOVAZ included. In 2009 transaction with AVTOVAZ was nearly concluded, but because of the crisis it was not completed.

Recently, by reason of drop in demand for new vehicles situation on the plant has been very tight. In April, 2009 production on IzhAvto plant was suspended, particularly because of absence of vehicle sets for manufacture of South-Korean models. Actually, at present the enterprise is on the brink of bankruptcy, its debts exceed 11 bln. roubles.

In this background unexpected interest for Izhevsk-located automotive plant was showed on the part of Cyprian Shonapol Investments Ltd., which acquired 24.9989 % of the enterprise shares. Under absence of any comments on the part of the former owner, the majority of experts came to the conclusion that the ultimate beneficiaries of Shonapol Investments Ltd. are the SOK Group.
Currently the major shareholders of ОАО IzhAvto (beside the Cyprian Shonapol): ООО Izh-Complect (24.88 %), ООО Gross (24.9 %) and ООО Norex (24.99 %).

General Motors – General Motors Company

General Motors company, established in 1908, liquidated, completed the procedure of bankruptcy, which was officially announced on July 10, 2009 in a special press conference by the GM management. A forty-day period, during which the procedure of GM bankruptcy has been carried out, is record-breaking for a company of such scale. The transaction could be blocked by suppliers of components and several groups of individuals, who were against reorganization of the company because of infringement of their interests. The bankruptcy court in New York declined the latest claims of opponents of the GM restructuring plan. According to the judge Robert Herbert, he scrutinized all protestations against quick restructuring of the company, advanced by the creditors and suppliers, and considered them unreasonable. “If GM is liquidated neither shareholders, nor creditors will be able to return their money”, he remarked. The court decision on GM profitable assets sale to the “new” company, which will be named General Motors Company came into force automatically.

New General Motors is valued at 63-73 bln. US dollars. It is established on the base of the best assets of the old GM, preserving only four key brands in the USA model line-up: Chevrolet, Cadillac, Buick and GMC, and maintaining the most branched and strong dealer network in the country, which will remain the same even after reduction of a number of dealers from 6 thous. to nearly 3.6 thous. at the end of the next year.

For completion of restructuring of business GM plans to dismiss 24 thous. people in North America, 450 managers included, shut down 14 plants in the USA and Canada. The new GM will be a more rational company. By the end of 2010 the company will control 34 assembly lines, plant for engine and mold tool manufacture. The staff of the company will consist of 64 thous. people. The leadership suppose that the company of such a scale will be more responsive to the market changes.

Subsidiaries of GM outside the USA (Saint-Petersburg-located plant included) will be acquired by the new company and, as it is expected, will resume operating without suspensions.

The new GM will have a less debt load (about 48 bln. US dollars against 176 bln. in May, 2009) and more effective operating accounting, which together with lowering of breakeven point will allow to reduce risks, operate with more profit at less volumes, and also to reinvest in the key spheres of modern technologies of development and improvement of production.

Besides, at the nearest future GM will get rid of loss making assets (Pontiac will be liquidated, Opel, Hummer, Saturn and Saab will be sold) and focus on manufacture of compact and ecologically clean vehicles. Within this ‘reorientation’ GM does not exclude a possibility of the logotype change, its colour will possibly be changed from blue to green.

Further financial development of General Motors on the part of the American government is not planned. Subject to the restructuring plan the American government will get 60.8 % of the renewed GM, Trust Fund of medical service of United Automobile Workers Union (UAW) – 17.5 %, the Canadian government and Canadian Ontario, which granted credits in the amount of 9.5 bln. US dollars, will receive 11.7 %. Besides, 10 % of shares in the new company will be held by the old GM, which will undertake obligations for debt security. The old General Motors Corporation will change its name for Motors Liquidation Company and later will be liquidated.

The USA president Barack Abama declared that the state does not plan to always control GM and will get rid of the controlling interest as soon as the financial condition of the concern improves. The renewed General Motors Company plans to hold IPO in 2010.

Incomplete Transactions

Penske Automotive Group – Saturn

Within debt restructuring General Motors is selling out a part of owned brands. In particular, a preliminary agreement on transfer of Saturn to Penske Automotive Group has already been signed.

Saturn brand was created by GM 25 years ago in order to make competition for Japanese automakers in the segment of inexpensive vehicles. At the beginning of 2009 because of difficult economic situation the brand’s volumes of realizations decreased by 58 %.
Penske Automotive is second in size among the largest auto dealer companies in the USA and specializes mainly in premium brand vehicle sales, which account for 65 % of its assortment.

According to the preliminary agreement, GM transfers to Penske rights for production of Aura, Vue and Outlook models, and for a trade mark and the brand name, production facilities, 350 dealer companies and about 13 thous. working places. Astra hatchback and Sky remain under General Motors ownership.

According to New York Times, after sale the Saturn line-up will be completed with models, acquired from other manufacturers. General Motors reports that the agreement will be signed and come into force in the third quarter of the current year, as the parties and the government have to clear up formalities.

Koenigsegg Automotive – Saab

In June, 2009 a new owner of Saab Automobile AB was revealed. Now the subdivision of General Motors, will probably be owned by the Swedish Koenigsegg Automotive company. At that, GM during a certain period of time will provide Saab with some of its technologies.
The Koenigsegg company was established in 1994 by a Swedish businessman Christian von Koenigsegg. Only 45 workers work in the company, manufacturing not more than 18 sport cars each priced at about 1.4 bln. US dollars annually.

As for Saab, for the moment the company’s staff amounts o about 15.4 thous. people, employed on plants in different countries. Last year sales of the brand in the markets of Scandinavia, Europe and the USA amounted to 93 thous. vehicles. However, the current total debt of the company reached 10.7 bln. Swedish kronas, of which 9.7 bln. kronas (about 1.3 bln. US dollars) are a debt to GM, 347 bln. kronas is a debt to the Swedish government, and other 647 bln. is a debt to other creditors.

In June, 2009 the bankruptcy Swedish automaker agreed with creditors with creditors on remission of a greater portion of the debt, which was one of the major conditions of sale of the company to the new owner. Not all of the Saab debtees agreed on restructuring of the debt (in particular, Swedish Ministry of taxation), but a number of those, who agreed, exceeded 75 %, which was enough for the judicial decision. Terms of the transaction also imply that Saab will receive a loan of 600 bln. US dollars from European Investment Bank (EIB), securities on which will be provided by the Swedish government.

Closing of the transaction is planned for the end of the third quarter of the current year and it depends on approval of the regulatory authorities. The rest terms have not yet been revealed.

Sichuan Tengzhong – Hummer

The Chinese Sichuan Tengzhong Heavy Industrial Machinery company is negotiating an issue of the Hummer brand acquirement. It should be reminded that at the beginning of June the GM concern agreed to sale Hummer to the Chinese automaker for 500 bln. US dollars.

Sichuan Tengzhong Heavy Industrial Machinery Company Ltd. is one of the largest private industrial companies in P.R.C. It manufactures equipment for heavy-duty production, special-purpose vehicles, equipment for bridge and building constructions, and for the energy industry.

It is supposed that within the said negotiation the Chinese party will receive rights for the brand, logotype, design of the current and future Hummer models, advertising slogans and dealer networks and the top-management of the subdivision. Closing of the transaction was planned for the autumn of the current year. However, for acquirement of the American brand the Sichuan Tengzhong company has to receive an approval of the Chinese government, which can put a veto on any foreign investments, which exceed 100 mln. US dollars.

Many experts have been rather skeptical about prospects of this agreement recently. The fact is that National Development and Reform Commission – NDRC, contests against the possible transaction. The official version of the potential refusal of the Chinese authorities is that powerful off-roaders contravenes with policy of the Chinese government intended for development of energy-saving technologies. Besides, NDRC is concerned with the fact that Sichuan Tengzhong Heavy Industrial Machinery, which specializes in production of special-purpose vehicles, has no experience and resources necessary for such business, as manufacture of executiveoff-roaders.

Geely – Volvo

Geely Automobile Holdings, which is a large Chinese automaker, plans to acquire the Volvo brand from the Ford concern. According to Chinese MSM and an American newspaper Wall Street Journal, a preliminary agreement has already been concluded by the parties. Official representatives of the companies have not yet made comments on this information.
After formalization of the purchase Geely plans to launch production of Volvo vehicles in China. Particularly, in Dongguan of the South-Chinese Guangzhou province a plant for manufacture of Volvo XC90 crossovers, which are now produced in the USA, will be constructed.

A sum of transaction between Geely and Ford are not reveled yet, however, according to experts’ estimates, the American concern is unlikely to sale the Volvo brand for less than 3 bln. US dollars. Acquirement of the brand will allow Geely to enter the market of more expensive models.

Magna, Sberbank/ RHJ International – Opel

At the end of May, 2009 GM and German authorities announced a transaction on selling of Adam Opel GmbH, which is a European affiliate of General Motors, owning Opel and Vauxhall brands, to the consortium of Canadian and Austrian supplier of automotive components Magna International Inc., Russian Sberbank and the GAZ Group. In the meantime a Memorandum of Understanding was concluded; the transaction was planned to be completed till the middle of July, 2009. Magna claimed for 20 % of Opel shares, Sberbank – for 35 %, GM planned to reserve 35 %, Opel would get the rest 10 %.

However, later in MSM information that the bankrupt General Motors is negotiating on selling of the German brand with other interested parties, in particular, with Chinese automaker BAIC (a partner of German Daimler automotive concern and American Ripplewood concern) and a Belgium investment company RHJ International. Despite of a long and tense process of negotiation, the question is still open.

On July 20, 2009 Canadian Magna and Russian Sberbank changed their offer on selling of the European division of General Motors. They still want to acquire 55 % of Opel shares but now want to divide the stock in two, in other words, each wants to get a 27.5 % interest.

According to a number of experts, Sberbank reduced its stockholding in the German concern on the insistence of GM. It is known that the bank intends to resell its interest in Opel to an undisclosed Russian automaker, and for General Motors it is profitable that the final buyer gets less shares than preserves GM itself.

Just after the Magna and Sberbank consortium two other potential investors submitted their offers for purchasing of Opel. All these offers are to be analyzed not only in the head office of the concern but by the authorities of Germany, as well. The date of the final decision still is not specified.

Experts are not of the same opinion about the prospects of the transaction: some think that GM will chose Magna and Sberbank as a buyer for Opel, considering a high degree of state support, which is given to this offer; others are absolutely sure that RHJ International fund will win. Chances of Beijing Automotive Industry Holding Co. are practically equal to zero.
It was reported earlier that the Magna and Sberbank consortium plans to invest in the Opel stock capital 500 bln. euros with 4.5 bln. euros of state securities. RHJ International is ready to pay 300 mln. euros for 51-55 % of Opel shares with 3.8 bln. euros of state securities.

Porsche – Volkswagen (Volkswagen – Porsche)

The story of Volkswagen and Porsche reaches back. Both automotive companies were once owned by a German designer and businessman Ferdinand Porsche. Attempts of the descendants to return control over Volkswagen failed, in 1960 the company became an open joint stock company and was owned by a great number of minority shareholders.
In 2005 Porsche resumed ambitious attempts to take over Volkswagen. For the several last years the company has systematically sold shares of the European automaker, which was the largest by sales, and by the beginning of 2009 accumulated the controlling interest (nearly 51 %) of Volkswagen, spending in total 23 bln. euros, including 9 bln. of borrowed funds.

But the sport car maker could not start the procedure of merger because of the so-called “Law on Volkswagen”, which allows the authorities of Lower Saxony (hold a 20 % stock of shares) to put a veto on any decision concerning fate of the German automotive concern.

As a result, Porsche, which in crisis found itself with a multibillion debt, had to start search for new partners. In particular, its leadership considered a possibility of sale of 25 % of shares to investors from Qatar, and a little later VW concern itself submitted an offer of 8 bln, euros for Porsche and other 3 bln. for its dealer network.

The Supervisory Board of Porsche, discussing the offer at an extraordinary meeting, which was carried out on July 23, 2009, accepted VW conditions. No details about the alliance of Volkswagen and Porsche have yet been specified, but representatives of the German concern remarked that the sport car maker will remain an independent company. At that the management of VW specified that the Porsche and Pih families, holding 100 % of the Porsche shares, will remain the biggest shareholders of the company and will be able to take part in development of the merger agreement. Besides, the Supervisory Board of Volkswagen approved selling of 17 % of their shares to investors from Qatar.

As it was earlier reported, takeover of Porsche will be carried out in two steps, 50 % of shares for each tranche, after that the brand will become the tenth in the VW Group. The actual terms of the alliance and fate of a 51 % interest in Volkswagen held by Porsche have not been specified yet.