BMW’s Chinese JV partner Brilliance could be an acquisition target for state-owned FAW, according to a Reuters report.

The report cited anonymous sources with direct knowledge of the matter and valued the deal at an estimated USD7.2bn.  

Major Brilliance shareholder Huachen Automotive Group has been declared bankrupt and has entered a debt restructuring programme; it defaulted on major loan repayments last year as a cashflow crisis hit.

The report said that plans are under discussion that would entail FAW initially purchasing 30.43% of Brilliance owned by Huachen and 11.89% owned by the state-controlled Liaoning Provincial Transportation Investment Group. After that it would bid for the rest of Brilliance’s shares.

The report also said that to facilitate the deal, FAW would create an offshore investment vehicle and is also seeking other investors.

BMW’s JV with Brilliance would not be directly affected by a change in ownership to Brilliance, but the implications of such a change are sure to be examined closely in Munich.

See also: BMW’s Chinese partner Huachen declared bankrupt