Chinese automaker FAW Group is reportedly looking at purchasing Brilliance China Automotive Holdings for about US$7.2 billion (RM29.2 billion), Reuters reports. The potential acquisition of BMW’s main partner in China by FAW comes at a time when Brilliance’s top shareholder, Huachen Automotive Group, is on the brink of bankruptcy, having defaulted on 6.5 billion yuan (RM4.08 billion) in debt obligations late last year.

Sources told the news agency that the purchase would be a two-stage deal, in which FAW would first purchase 30.43% of Brilliance owned by Huachen as well as the 11.89% stake held by the state-controlled Liaoning Provincial Transportation Investment Group, before making a mandatory bid for the rest of Brilliance’s shares.

Both FAW and BMW declined to comment on the matter, while Brilliance and Liaoning did not respond to requests for comment. Meanwhile, Huachen said the information was false, but did not elaborate.

Shenyang-based Brilliance and BMW have a 50-50 joint venture, BMW Brilliance Automotive, which accounts for nearly all of Brilliance’s profits. Back in 2018, it was reported that BMW was planning to increase its stake in the JV to 75% by 2022, when China lifts the rules on foreign ownership limits. The extended JV contract will supposedly be valid for 22 years, from 2018 to 2040.

Brilliance also owns 51% of another JV with Renault, which makes vans and SUVs. State-owned FAW has JVs with Volkswagen, Toyota and Mazda as well as its own brands, which include luxury marque Hongqi and truck brand Jiefang. Earlier this week, FAW announced that it was entering into a partnership with Italian automotive firm Silk EV to develop a new line of ultra luxury, high-performance electrified vehicles under the Hongqi badge.