Opel poker
July 23, 2009
"We had a good and thoughtful discussion around the key operating metrics and key issues associated with the three final offers we received on Monday evening," said John Smith, GM's chief negotiator for the sale of Opel.
"We have agreed to continue detailed talks with both Magna and RHJI to secure Opel's future."
Magna, the Canadian auto parts maker, which has teamed up with Kremlin-controlled Russian bank Sberbank and automaker GAZ, won German government backing for its bid in May and it remains Berlin's favorite.
Magna's bid, which was improved at the last minute on Monday, is favored by the German government and Opel workers, not least because it envisages fewer job losses in Germany.
Magna now the front runner
The Magna-led bid is likely to result in 11,000 job cuts across Europe, however only about 2,600 of these are expected to happen in Germany.
The Magna group plans to invest 500 million euros ($705 million) and has called for 4.5 billion euros in state guarantees. It sees GM emerging with a 35 percent stake in Opel, while Magna and Sberbank would each hold 27.5 percent, and the workforce 10 percent.
At the same time, the group also plans to boost Opel's presence in the emerging Russian car market, though the details on the conditions for this are still far from clear. According to the Russian newspaper Kommersant, Magna is insisting that GM includes in the deal all the intellectual property rights connected with Opel.
Speaking in Munich last week, German Chancellor Angela Merkel said the Magna-led offer was an "excellent starting point" for securing Opel's future, although she added "many issues still needed to be cleared up."
RHJ bid could cut more jobs in Germany
In contrast, a successful bid from RHJ could result in the loss of 3,900 jobs in Germany as part of a cutback of 9,900 Opel jobs across Europe.
RHJ is offering to invest some 300 million euros in Opel in return for a 50.1 percent stake in the company, and is seeking less in state-backed loan guarantees than Magna, at 3.8 billion euros.
"Our negotiations with GM are well advanced," said RHJ spokesman Arnaud Denis.
Under the RHJ plan, GM would retain a greater holding at 39.9 percent, with Opel's employees gaining the final 10 percent. The RHJ proposal also holds out the possibility that the New Opel unit could be sold back to GM, or some other party, at some point in the future as part of an exit strategy.
Berlin hopes to come to an agreement with GM in the next few weeks, a government spokesman said Wednesday, although the final decision on who will finally take over Opel will probably not occur for several months yet.
While the final decision lies with GM, the German government is involved as it has set to stump up billions of euros in loan guarantees to sweeten any takeover deal in a bid to save tens of thousands of jobs.
Beijing retreat comes after GM deal briefing
The news of Beijing's retreat comes a day after GM briefed the Opel Task Force, including representatives of federal and regional government, on the details of the three offers open for Opel.
Officials of the Economics and Finance Ministries, representatives of the four German states which have Opel plants, and an economic adviser to the Chancellor attended Wednesday's meeting in the chancellery in Berlin.
General Motors, which emerged from bankruptcy on June 1 with the US government as its majority shareholder, has been showing a new confidence and independence as it tries to sell its European subsidiary, which includes the British Vauxhall factories and Opel factories in Spain, Belgium and Poland.
The BAIC was among the three parties who submitted bids by the deadline on Monday along with Magna and Sberbank.
The Italian automaker Fiat, which was the first company to announce its interest, did not in the end submit a bid.
Shortly before Wednesday's meeting, German government spokesman Ulrich Wilhelm said the government still had a "certain preference" for the Magna bid, after a tentative deal was reached between the two parties plus Opel and its parent GM in tense negotiations in May. A decision may be taken within the next few days.
This would not happen before government backed loans are repaid by 2014.
nda/mll/nw/dpa/AP/AFP
Editor: Neil King