Open

Coming up

Don't miss

Replay


LATEST SHOWS

ENCORE!

Tango Takeover in Paris

Read more

WEB NEWS

Calls for ISIS media blackout after execution of James Foley

Read more

IN THE PAPERS

'Steely resolve of reporters exploited by pared-down employers'

Read more

BUSINESS DAILY

US judge calls Argentina bond swap offer illegal

Read more

IN THE PAPERS

Cécile Duflot ruffles some feathers

Read more

MEDIAWATCH

Media accused of pro-protester bias in Ferguson

Read more

DEBATE

The Murderous Lure of Jihad: Tackling ISIS and its Worldwide Recruitment (part 2)

Read more

DEBATE

The Murderous Lure of Jihad: Tackling ISIS and its Worldwide Recruitment

Read more

FOCUS

Republicans block Obama's bid to hike minimum wage

Read more

  • Besieged by problems, Hollande faces unhappy return from summer holidays

    Read more

  • Russian aid convoy drives into Ukraine

    Read more

  • Hamas publicly executes "informers"

    Read more

  • French firebrand leftist to quit party presidency, but not politics

    Read more

  • Gunmen kill scores in Iraqi Sunni mosque attack

    Read more

  • Fear of Ebola sky-high among Air France workers

    Read more

  • US says Islamic State threat 'beyond anything we've seen'

    Read more

  • Malaysia mourns as remains of MH17 victims arrive home

    Read more

  • Turkish Foreign Minister Davutoglu set to be Erdogan's new PM

    Read more

  • Hollande is ‘nobody’s president’ says former French minister

    Read more

  • Two US Ebola patients leave hospital ‘virus-free’

    Read more

  • US reaches historic $16.7bn settlement with Bank of America

    Read more

  • Special report: Supplying Ukraine’s soldiers on the front line

    Read more

  • France delivered arms to Syrian rebels, Hollande confirms

    Read more

  • Interactive: Relive the Liberation of Paris in WWII

    Read more

Business

GM agrees to sell Opel to Canada's Magna

Video by Raphaël KAHANE

Text by NEWS WIRES

Latest update : 2009-09-11

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

COMMENT(S)