Magna's proposal to take over German automaker Opel has been approved at the last-minute before former parent GM files for bankruptcy. The deal also includes U.K. manufacturer Vauxhall.
A deal to rescue Opel looks to have been finalized just hours before the company's parent, General Motors, files for bankruptcy protection. The deal will hand control of German automaker Opel and British automaker Vauxhall to Canadian autoparts giant Magna International.
The last step needed to complete the deal was securing a bridge loan of over $2.1 billion to cover short-term operating costs. Germany's national government will pony up half of the short-term loan, while the German states of Thuringia, Rhineland-Palatinate, Hesse, and North Rhine-Westphalia will combine for the other half. The last two states mentioned approved their portion of the loan yesterday, while all four states play home to Opel facilities.
After all the discussions were concluded, Juergen Ruettgers, governor of North Rhine-Westphalia, said, "The time of uncerntainty is over. ... The main components of Opel's future remain in Europe."
Russia's largest bank, Sberbank, backed Magna's ownership bid in exchange for 35% of the automakers. Magna keeps a 20% stake, giving the team a majority holding. GM will keep 35%, with Opel employees getting the remaining 10%.
All four German Opel factories will remain open, under deal terms. However, nearly 2,600 will likely lose their jobs in Germany, part of roughly 8,000 European job cuts. Much to the dismay of U.K. officials, Magna has been quiet on their plans for Vauxhall, and the 5,000 British workers based in two plants there.
The two automakers also operate in Belgium, Hungary, Poland, and Spain. As recently as 2006, Opel had also been using a facility in Portugal.
Roland Koch, governor of Hesse, spoke optimistically of the deal, saying, "We've decided that there is to be a new European company."
"I think that for Opel and its employees, it is an unbelievable chance."