Two auto firms exit talks for Fisker
Updated: 2013-03-22 11:24
By Michael Barris in New York (China Daily)
Attendees view a Fisker Automotive Inc Karma ES ahead of the 2013 North American International Auto Show in Detroit on Jan 12. Two Chinese carmakers have withdrawn from the bid for Fisker. Jeff Kowalsky / Bloomberg
The apparent withdrawal of two Chinese automakers from the bidding for Fisker Automotive Inc casts uncertainty over the US maker of luxury hybrid cars as a loan payment looms.
Zhejiang Geely Holding Group and Dongfeng Motor Corp have backed away from negotiations to buy California-based Fisker due to problems with the terms of a US loan agreement, according to news reports.
The talks' apparent collapse comes a week after Fisker founder Henrik Fisker stepped down as executive chairman, citing "several major disagreements" with management over the company's business plan. The company was also hit by a series of recalls due to battery, software and cooling-system problems in 2012.
David Sedgwick, a Detroit-based analyst and former editor of Automotive News, said Geely's departure is in line with the Chinese company's earlier comments on the negotiations.
"They didn't like all the conditions that the US government wanted to set on the deal," Sedgwick said.
Fisker spokesman Roger Ormisher told China Daily that the company "continues to be in discussions with multiple parties but is not able to comment due the confidential nature of those discussions".
On Monday, Reuters cited sources close to the matter as saying that Geely, which owns Sweden's Volvo and was widely considered to be the favored bidder, would drop out of the purchase talks. According to the report, Dongfeng submitted its final offer but Geely declined to make one because its executives and advisers had concluded that a deal would be too risky.
The Wall Street Journal, citing a person familiar with the situation, said Geely and Dongfeng had both pulled back from the discussions.
Initial bids from the two companies were said to be valued at $200 million to $300 million each.
Geely and Dongfeng jumped into the bidding after Henrik Fisker said in December that his company was seeking potential strategic partners. Reuters reported at the time that Geely appeared to be the preferred suitor. Sources familiar with the deal told the news service that Geely had sent a team of engineers to Fisker's headquarters to evaluate the Anaheim, California, company and its technology. Fisker makes battery-powered electric cars equipped with a small gasoline engine to extend driving range.
A Fisker acquisition seemed to fit with Geely's efforts to grow in China's electric-vehicle market, where sales have been weak despite government efforts to increase production of alternative-fuel vehicles. Geely's Hong Kong-listed subsidiary had just signed a 1 billion yuan ($161 million) deal for a 50-50 joint venture with Jinhua-based Kandi Technologies Group to make low-speed electric vehicles.
For the past few years, China has been promoting widespread adoption of electric cars to combat a severe smog problem that is both a health and economic threat.
Fisker was said to be weighing a $350 million offer from Dongfeng. Under terms of its bid, Dongfeng would receive 85 percent of the US automaker, an insider told China Daily on condition of anonymity.
Fisker's star product is the Karma luxury rechargeable car, which sells for more than $100,000. A plug-in hybrid, it runs on an electric motor and has an on-board gasoline engine that recharges the battery.
Fisker halted production of the car last year after US-based battery supplier A123 Systems Inc filed for bankruptcy. It said on Feb 7 that it would begin making vehicles again "fairly soon".
Fisker still owes the US Department of Energy about $200 million from a loan program the agency halted last year following the bankruptcy of solar-panel maker Solyndra LLC.
Reuters had reported that Fisker's leaders and their advisers believed Geely was "more serious" and "passionate" about the company and its technology. Geely's acquisition of Volvo in 2010 also indicated that Geely probably could move faster in its decision-making process than State-owned Dongfeng.
However, Zhong Shi, a Beijing-based auto analyst, said he believed China's Wanxiang Group, which bought A123 Systems last year, also could be a suitor for Fisker.
According to Zhong, European and Japanese automakers aren't familiar with or interested in Fisker's hybrid-car technologies, so Chinese bidders have been better positioned to win the bidding.
The Wall Street Journal also reported that Fisker's management had proposed to the Chinese companies that as part of any sale it would tap the remaining portion of its $529 million US government loan. That would have committed a new owner to building Fisker cars at a former General Motors Co factory in Delaware.
(China Daily 03/22/2013 page10)