Beijing Auto plans detailed bid for GM's Opel unit

China's Beijing Automotive Industry Holding Co. plans to present a detailed bid for General Motors Corp.'s core European Adam Opel GmbH operations within the next few days, hoping to step in should GM's talks with Magna International Inc. turn sour, a person familiar with the matter said Wednesday.

In May, GM signed a memorandum of understanding to sell a majority stake in Opel and its U.K. sister brand Vauxhall to Canadian auto supplier Magna, which has launched an offer backed by Russia's Sberbank Rossia and auto maker GAZ. The agreement isn't legally binding, but Opel's powerful labor unions have already voiced their support for it.

Beijing Automotive held discussions with GM last week about the possibility of bidding for Adam Opel, The Wall Street Journal reported on June 25, citing a person familiar with the situation. The Chinese company has firmed up details of its offer after first expressing its interest in the unit in May.

Magna still appears to be the front runner, though talks continue with Beijing Automotive and RHJ International SA, another person familiar with the matter said.

The tentative agreement with Magna is backed by EUR1.5 billion in bridge financing provided by the German government to keep Opel afloat after parent GM filed for bankruptcy protection in the U.S.

RHJ appeared as a serious contender to Magna earlier this week, after media reports suggested it was close to signing a memorandum of understanding with GM on Opel.

But analysts question whether the Belgium-based financial investor has the muscle for a deal after posting on Tuesday a EUR1 billion loss for its fiscal year.

Opel "is much too big," said KBC analyst Tom Simonts, adding RHJ has, at most, just over EUR300 million to invest, and few assets to sell for good money.

The Belgian investment company's chief executive, Leonhard Fischer, said during a conference call Wednesday that RHJ is seeking to raise cash for future investments and to sell some assets.

He declined to comment on Opel, saying only that RHJ "would always look at special opportunities if they are very special."

A person familiar with the situation said RHJ has tweaked its offer for Opel and now proposes to cut fewer jobs in Germany than initially planned in order to win over support from labor unions and German politicians.

Negotiations over the fate of Opel, which employs around 26,000, come at a delicate time. Germany is preparing for federal elections in September and talks over large-scale job cuts could potentially cost votes.