With weakened U.S. auto giant General Motors now coming down to the wire with an anticipated bankruptcy filing on Monday, the automaker has agreed to sell a majority stake in its ailing European Opel subsidiary to a consortium led by Canadian super-supplier Magna International.
The deal came hours after the other bidder in the battle for Opel, Italian automaker Fiat SpA, decided to boycott a meeting with German government leaders and others involved in the Opel rescue effort. The government had pressured GM to agree to the sale before it would approve a bridge loan worth $2.1 billion. The Germans will also provide another $420 million in short-term assistance, announced Finance Minister Peer Steinbrueck, to keep Opel running while the details of the sale are finalized.
When GM first announced it would need assistance to save Opel, it said it would be willing to relinquish a minority stake in the critical subsidiary. But it later acknowledged it would be willing to become a minority shareholder, and the final deal will give Magna 20% of Opel and GM’s other European assets, while the Russian Sberbank will acquire another 35%, the same share remaining for GM. Opel employees will control a 10% stake.
“Opel has been given prospects for the future,” said German Chancellor Angela Merkel after the deal was completed. “Now the work for Opel and for Magna … really begins.” Merkel had repeatedly said that the German government was neither interested nor willing to take a stake of its own in Opel – unlike the approach taken by the Obama Administration, which expects to wind up with 70% of the European unit’s parent, General Motors. (more…)