German Chancellor Angela Merkel has announced that US carmaker General Motors will be selling its European units Opel and Vauxhall to Canadian car parts manufacturer Magna, ending months of speculation.
REUTERS - Motors has decided to sell Opel to a group led by Canadian car parts maker Magna, ending months of uncertainty over the European unit’s fate.
GM expects a definitive agreement to be ready to sign within a few weeks and predicted the deal could close in a few months, it said in a statement on Thursday.
Speaking at a news conference in Berlin, German Chancellor Angela Merkel welcomed the decision, saying it offered Opel a “new beginning” and that conditions attached to the sale were “manageable and negotiable.
“I am very happy about this decision,” said Merkel, who had backed the Russia-backed Magna bid over a rival offer from Belgium-listed financial investor RHJ International. “The government’s patience and purpose has paid off. It was not an easy path.”
Talks on a sale of Opel, which GM is selling as part of a U.S. government-orchestrated restructuring, have dragged on for months, fuelling anger among its 50,000 European workers, half of whom are in Germany.
Magna, backed by a Russian state-owned bank, had been competing against Brussels-listed financial investor RHJ International, but Germany had refused to back that bid with financing guarantees.
Merkel has promised 4.5 billion euros ($6.6 billion) in government guarantees if GM opted for Magna and its Russian backers.
GM’s decision represented a victory for Merkel only weeks before she tries to win a second term in a federal election.
“My analysis is that it helps Merkel,” said Gerd Langguth, political scientist at Bonn University.
Big German presence
GM has controlled Opel, which traces its roots in Germany back to the 19th century, for the past 80 years.
It is based in the western city of Russelsheim and has four plants in Germany where it makes everything from three-door Corsa subcompacts to Zafira vans.
Opel has two factories producing automobiles under the Vauxhall badge in Britain as well as major sites in Belgium, Poland and Spain.
“It’s a relief that there is now a decision,” said Anke Rezac, who works in vehicle electronics at Opel’s development centre in Ruesselsheim.
“We now have less uncertainty surrounding ownership although many questions remain. Among all the bad choices we had, Magna is the best option. They know about the auto industry and want to develop the business.”
GM was reported to have concerns about its ability to control its intellectual property and vehicle technology in the Russian partnership and some of its senior management had said the rival bid by RHJ would be easier to implement.
Detroit-based GM said on Thursday several key issues needed to be finalised to get the Opel deal with Magna done.
Magna wants to use plant capacity at Opel by tapping into its expertise in contract manufacturing and building rival models for outside carmakers. It forecasts high growth rates, particularly in Russia, home of consortium partners Sberbank and GAZ.
Under their proposal, Magna and Sberbank would each own 27.5 percent of the company, while Opel employees would hold 10 percent and GM the remaining 35 percent. Some 10,000 European jobs would be cut, a quarter of those in Germany.
Date created : 2009-09-10