Our favorite blogger covering the ongoing Opel saga, John Smith of GM, said this morning that the Magna/Sberbank deal was delayed until at least the regular GM Board of Directors Meeting on November 3.
The sticking point now appears to be the financing that allegedly tilted the decision to Magna – how much, and by what governments?
Smith, who is the lead negotiator on the sale, implied that the deal would be ready to go by November after months of delay. The GM Board last reviewed the matter in September and instructed Smith to proceed with the Magna-Sberbank deal.
However, even if the GM Board approves the sale next month, it is still not clear that all the legal approvals from the European Union will be in place.
Since approval was given for the sale to the Canadian-Russian consortium, the European Union has been reviewing the Opel investor process and the circumstances surrounding the selection of Magna-Sberbank. A key document appears to be a letter from German Economics Minister Karl-Theodor zu Guttenberg that sets forth terms.
Critics of the deal contend that Germany, as the largest potential contributor of funding — €4.5 billion ($6.8 billion) — unfairly manipulated plant closings to keep more jobs there. Opel/Vauxhall also has efficient plants in Spain and the United Kingdom.
Last week, the Directorate-General for Competition at the European Union expressed concerns about possible limitations on the availability of government financing for all Opel bidders, which is code for Germany’s financial manipulations. The Directorate General wants to know how that may have influenced the selection process.
The German Government was asked by DG Competition to communicate its position on financing availability to GM and the Opel Trust Board who, in turn, recommended Magna to the GM Board.
Highly placed GM executives told me that the contentious labor givebacks and plant closings are done. However, they might be interpreting the German government influenced plant list as what is done. DG Competition is, apparently, of a different opinion here.
The political situation resembles the GM Bankruptcy reorganization in the U.S. — but in reverse. With the U.S. Treasury Department providing $50 billion in funding, it was able to force a deal relatively quickly. It was only when GM announced necessary dealer closings, that the Congressman representing individual states became involved. If Congress had been involved in the original restructuring, GM would now be history.
Here, the individual state with the strongest commitment to manufacturing is trying to force a deal, and the European Central Government with little interest in manufacturing is objecting.
If this goes on much longer, Opel will be history.