GM to sell Opel stake to Magna
Berlin, September 11, 2009
General Motors has agreed to sell a 55 per cent stake in Opel to a group led by Canada's Magna after months of fraught negotiations that had weighed on the European unit and its 50,000 workers.
The decision, after a two-day meeting of GM's board, was welcomed by German Chancellor Angela Merkel, who had lobbied for the Russian-backed Magna bid and could receive a boost from GM's choice in the run-up to an election on September 27.
Analysts said GM had no clear alternative to the Magna deal because of the costs of raising billions of dollars to keep the brand and fund its restructuring.
The deal also represents a victory for Russia, whose government had pushed aggressively to secure itself a foothold in the rapidly consolidating global car market.
Talks on Opel, control of which GM is giving up as part of a US government-orchestrated restructuring, had dragged on for months, fuelling anger among the carmaker's staff, half of whom are in Germany.
Under the Magna deal, Detroit-based GM will retain a 35 percent stake in Opel, with Magna and its Russian partner, state-owned bank Sberbank, taking 27.5 percent apiece, and workers the remaining 10 percent.
'I am very happy about this decision. The government's patience and purpose has paid off,' said Merkel, describing the deal as a 'new beginning' for Opel.
GM opted for the bid by Magna and its Russian partners, Sberbank and GAZ, over a rival offer from Belgium-listed investor RHJ International.
The decision was approved by a trust set up to shield Opel while GM went through bankruptcy proceedings, but the trust's board did not back the deal unanimously, highlighting divisions about the logic of Magna's plan.
Sberbank Chief Executive German Gref said the deal's structure was 'unprecedented complicated' and Thursday's announcement by GM was an important intermediate step but not a final one.
Elsewhere, Opel trust board member Manfred Wennemer, the former head of auto supplier Continental, expressed doubts about whether Magna could make Opel competitive and said the risks of the deal lay with German taxpayers.
Germany had promised 4.5 billion euros ($6.6 billion) in government guarantees if GM opted for Magna, while refusing to support the rival bid from RHJ.
Auto analysts were also skeptical, describing the decision to sell to Magna as political.
'This is an industry that is burdened with excess capacity and we've just passed through one of the best opportunities in over a decade to see real capacity taken out of the industry,' said Michael Tyndall, an analyst at Nomura International.-Reuters