John Smith, GM’s chief negotiator on the sale of Opel to an outside investor, today defended the decision by GM’s Board of Directors on Monday to retain Opel.
What many observers characterized as a surprising reversal of the board’s direction in September to pursue such a sale, and a possible slap in the face of CEO Fritz Henderson, was fundamentally a strategic move made possible as GM’s businesses improved in Europe and the U.S. compared to the beginning of the year when the sale was first seriously explored.
So rather than deal with the complications of outside owners taking over GM’s key small car and technology supplier and the core of its European operations, GM will now go it alone and “restructure Opel/Vauxhall more quickly and more successfully than any other investor,” Smith promised.
Such a strategy has large inherent risks, of course, since European governments and labor unions had already endorsed the taxpayer financing, plant closings and contract changes that were necessary to make the sale of Opel/Vauxhall to Magna viable.
Canadian parts supplier Magna International and its partner Sberbank, the largest Russian bank, offered €250 million, about $400 million, for a 55% stake in Opel.
However, the deal was complicated, and there were concerns over the security of Opel’s future product plans and its central role in GM’s global strategy.