GM under pressure from German government to sell Opel to Canadian/Austrian auto parts maker Magna International Inc.
GM has gone into and come back out of bankruptcy but it still hasn't resolved the sale of its main European brand Opel.
The Detroit automaker is under pressure from the German government to formalize the sale of Opel to Canadian/Austrian auto parts manufacturer Magna International Inc. The German authorities prefer Magna over other bidders who have expressed interest in buying Opel. GM is holding out in order to get the best deal possible, now in a much stronger position that it was a few months ago.
The German government of Chancellor Angela Merkel has promised Adam Opel GmbH, GM's German subsidiary, 6.4 billion US dollars (4.5 billion euros) in aide on the condition it select Magna as the buyer. The government's main concern is keeping as much technology and as many jobs as possible in country. The Rüsselsheim, Germany-based Opel employs about 50,000 people across Europe, about half of them in Germany.
GM is also considering a bid from the Belgian investment group RHJ International SA. GM's chief negotiator John Smith calls their bid "simpler". But GM may prefer the RHJ bid because the investment group will acquire a majority stake, with the rest of Opel remaining with GM. This would make the possibility of GM one day re-acquiring a majority stake in Opel much easier to come by.
Under the deal preferred by the German government, Magna would get 27.5 percent of Opel, with another 27.5 percent going to Russian bank Sberbank. Opel employees would hold a 10 percent share in the independent automaker and GM would keep the remaining 35 percent.
GM will be reviewing all finalized bids today with an announcement forthcoming.