Beijing Jingxi Heavy Industry is brewing plans to restart its bid for Delphi.
Because of the opposition of creditors, Delphi's previous plan to complete the acquisition with the US private equity firm Platinum Equity for $3.6 billion has been overturned. At present, the United States bankruptcy court is asking Delphi to reopen its assets publicly.
"Jingxi West Heavy Industries has the intention to participate in this matter, but because the situation involved is very complicated, everything is still in the process of discussion." An insider of Beijing West Heavy Industries revealed to reporters.
This new company, which was just established during the year, acquired Delphi's global automotive suspension and braking project on March 30th at a price of 100 million U.S. dollars. It is preparing to build a high-end parts industrial park in Beijing. The overall acquisition of Delphi was once included in the company. Next acquisition plan.
On June 1 this year, Delphi announced the signing of an acquisition agreement with PlatinumEquity, which also includes GM’s $4 billion in financing for the transaction. Jingxi Heavy Industries was forced to abandon its plan to purchase Delphi. However, now that the above acquisition agreement has been overturned, Jingxi Heavy Industry will once again get the opportunity to participate in the bidding.
Bidding is doubtful
In accordance with the ruling of the Southern Bankruptcy Court in New York, regarding the reopening of its assets by Delphi, the court will terminate the bid by July 23 and approve the transaction by the end of July. This means that potential buyers interested in Delphi Assets can still bid freely before July 23.
"Although Jingxi Heavy Industry has the resumption of bid for consideration, it has not yet made a final decision. The overall acquisition of Delphi is a very complicated matter. We have to make many trade-offs and we will not rush to act." Inside the company said .
A person close to Jingxi Heavy Industry revealed to reporters that the funding problem was one of the reasons Jingxi Heavy Industries was cautious about the overall purchase of Delphi.
Earlier it was reported that Jingxi Heavy Industry had prepared 6 billion U.S. dollars for the bid for Delphi, which was far higher than the 3.6 billion U.S. dollars invested by General Motors and Platinum Equity Private Equity Fund. However, relevant personnel of Jingxi Heavy Industry made it clear to reporters that this information is Inaccurate".
In fact, the registered capital of BWI is only RMB 800 million, of which Shougang contributed RMB 408 million, accounting for 51% of the total share capital. Beijing Fangshan Asset Management Company invested RMB 200 million, accounting for 25% of the total share capital, under the Tianbao Group. Baoan Investment Development Co., Ltd. invested 192 million yuan, accounting for 24% of the total share capital.
However, it does not rule out the possibility that Jingxi Heavy Industry’s domestic and foreign investment institutions will conduct a full-scale acquisition. “At present, investment institutions have already found Jingxi Heavy Industry in connection with the joint acquisition of Delphi, but we are still assessing the feasibility within us,†said the insider.
In addition, a strong competitor also let Jingxi Heavy Industry hesitate to purchase the entire company. "While the U.S. bankruptcy court rejected Delphi's decision to sell to private equity funds Plat-inumEquity and General Motors by default, they are, after all, internal, and even if they are reopened, they have an advantage," the insider said.
In fact, General Motors' determination to regain Delphi has not been affected by the bankruptcy court ruling. As the key component supplier that General Motors has been relying on, Delphi’s ultimate vesting determines whether GM’s future critical supply chain will be controlled by others.
General Motors said in a statement that the public sale of Delphi does not mean that General Motors will disregard General Motors. It will still provide a comprehensive agreement to the Delphi bankruptcy case, retain a strong team to lead Delphi, and support its business development plan.
In the previous plan that was rejected by the bankruptcy judge, General Motors had invested US$2.5 billion, while the US private equity firm Platinum Equity had the remaining US$1.1 billion.
Of course, this is not the only competitor of Jingxi Heavy Industry. According to foreign reports, Delphi's debtor-owned asset (DIP) loan provider and Carl Icahn, who had participated in Delphi's bid, both expressed their intention to bid again. Delphi. Carl Icahn is a very active investor and non-executive chairman of the board of directors of Federal-Mogul, another US auto parts company. Prior to this, he also acquired Lear, Dana and others. Auto parts company's assets.
Non-core assets
Regardless of the results of the acquisition of Delphi by Jingxi Heavy Industry, the company’s previously acquired non-core assets such as Delphi suspension and brake system will not be affected.
According to Bingxi Heavy Industry insiders, the transaction was approved by the U.S. Bankruptcy Court last month and is currently preparing for the delivery of related assets. "The first day of asset delivery is expected to be November 1."
“Jingxi Heavy Industry has no clear intention to purchase Delphi completely. Compared to the acquisition of some technology assets, the overall acquisition is too complicated, and the time is rushed and there are many bidders, so Jingxi Heavy Industry is more cautious, but still Continual attention will be paid to other acquisition opportunities, said the person familiar with the situation.
The person admitted to reporters that Delphi's brake and suspension systems acquired by Jingxi Heavy Industries are non-core assets throughout Delphi, not too big a business, but for a newly established company, the annual sales revenue of this business Achieving $670 million is no longer a small dish.
In fact, the purpose of the establishment of BWI is to become an industrial platform for high-end parts and components of Beijing Automotive. Through mergers and acquisitions, key technologies and businesses are introduced, not just capital games.
Bingxi Heavy Industry insiders told reporters that for Jingxi Heavy Industry, digesting and absorbing the key technologies of the acquired business, maintaining the existing orders and ensuring the smooth operation of the business is the top priority, and we hope that we can do more solidly from the beginning.
"Total acquisition of Delphi can indeed help us to scale rapidly and acquire many advanced technologies. However, too many uncertainties, debt problems, the attitude of the U.S. government and General Motors, etc., will affect the final acquisition results." It said whether it will eventually decide to participate in the acquisition of Delphi’s core assets. It depends on whether this is in line with the future development direction of Jingxi Heavy Industry. In terms of acquisition, Jingxi Heavy Industry is actually more inclined to chassis systems and electronic systems.
“Of course, we are also considering other M&A projects. There are currently negotiations, and there are negotiations that have entered the substantive stage,†said the person familiar with the matter.
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