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Opel Deal Won’t Be Derailed, Say Partners, But Criticism Mounting

Union threatening to strike over job cuts, plant closings.

by on Sep.15, 2009

"A milestone," says Opel CEO Carl-Peter Forster (head lowered) of the sale of a controlling stake in the company to a consortium lead by parts supplier Magna. But there's growing opposition to the deal.

"A milestone," says Opel CEO Carl-Peter Forster (head lowered) of the sale of a controlling stake in the company to a consortium lead by parts supplier Magna. But there's growing opposition to the deal.

The newly-reconstituted Opel is getting off to a shaky start, even before General Motors and its new partners have completed their deal to share control of the struggling German automaker.

The deal will go through, said senior officials from both GM and Magna International, the Canadian supplier that led the acquisition of a majority stake in Opel.  But trouble could be facing the new partners on several fronts. 

For one thing, European Union officials may challenge the deal, which was completed under heavy pressure from the German government, and even Opel’s labor unions, which will receive a 10% stake in the former GM subsidiary, are warning of a possible “action” to pressure Opel not to close plants or trim it’s workforce.

A Deal You Can't Refuse: Free Subscription!

A Deal You Can't Refuse: Free!

Facing the threat of bankruptcy in Europe, GM announced, earlier this year, that it would sell a stake in Opel, in return for a German government bailout. Negotiations dragged on until last week, as it became clear that the U.S. maker was looking for an alternative bidder who might eventually allow GM to regain control of Opel. But last week, GM gave into pressure from Berlin, agreeing to sell a controlling stake in it’s troubled European operations to Magna and it’s Russian backer, Sberbank.

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Magna and Russians Land Opel

Supplier was favorite of Germans and GM.

by on May.30, 2009

What role Opel will now play in GM's effort to form a truly global empire is uncertain.

What role Opel will now play in GM's effort to form a truly global empire is uncertain.

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.

Subscribe to TheDetroitBureau.com“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…)