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GM Board Will Sell Majority Stake in Opel/Vauxhall to Magna International and Russian Sberbank

The German government supports the deal with financing.

by on Sep.10, 2009

The Federal Chancellor gets her way in time for tough election this month.

The Federal Chancellor gets her way just in time for tough election she is facing this month.

General Motors has just announced that its Board of Directors supports a bid from the consortium of Magna International Inc. and Sberbank to buy a majority stake in its European Opel/Vauxhall operations.

The other finalist in the bidding, Belgian-based private equity firm RHJ International, was not favored by the German government since it thinks massive job losses will result.

In a statement the GM says, “several key issues will be finalized over the next few weeks to secure the binding agreements, including the written support of the labor unions to support the deal with the necessary cost restructuring for viability and the finalization of a definitive financing package from the German government.”

After months of negotiations with numerous special interest groups, labor unions and European governments,  GM is now saying, “definitive agreements should be ready to sign within a few weeks, with closing to follow within the next few months.”

Under the  tentative deal, Magna/Sberbank will purchase 55% of the New Opel. GM will hold a 35% stake, and employees will be getting a 10% share.

Several contentious issues were not covered in the statement, including the role of Chevrolet in Russia and expanding Asian markets, as well as the intellectual property rights for the small car engineering that Opel currently provides for GM.


Opel Soap Opera Continues

As GM Board Meets, German Government threatens to call Opel loan.

by on Sep.09, 2009

As the flagship Insignia celebrates its first birthday, Opels future remains murky.

As the flagship Insignia sedan celebrates its first birthday, Opel's future remains murky.

When we last left our beleaguered European auto company, Adam Opel, the German Chancellor had politicized the proposed sale by calling for General Motors Company to sell its loss-making European subsidiary to a Russian backed consortium headed by Magna International.

The other finalist in the bidding, Belgian based private equity firm RHJ International, was not favored by the German government since it thinks massive job losses will result.

Since the government is facing national elections at the end of this month, and is under attack for its economic policies, it is not surprising that the government is playing for votes by trying to force the Magna deal on GM, which is favored by Opel’s labor unions.

In it’s latest, and thus far ineffective, attempt to force such a sale, the German government said this morning  it would call the €1.5 billion bridge financing loan in November that is keeping Opel afloat, and it would not advance another €3 billion already promised if the sale didn’t go to Magna.


Adam Opel Auction Nearing End of the Beginning

Magna and Russian bank submit new offer for majority control. General Motors is now considering at least three offers.

by on Jul.21, 2009


General Motors is pushing for assurances that it has a major voice in future product decisions.

Magna International Inc. and Savings Bank of the Russian Federation (“Sberbank”) have just confirmed that they have jointly submitted a revised offer to acquire a 55% interest in Adam Opel GmbH and Vauxhall that is “intended to assure the long-term viability of Opel.”

Under the offer, they will purchase 55% interest in Opel, which would be owned by a 50:50 Magna/Sberbank Consortium. This trims the size of the Russian holdings from 35% in the previous offer. General Motors Company would have a 35% interest, and Opel employees get 10% as part of a new labor agreement.

GM is said to be seeking a way to regain controlling interest in the future since Opel engineering is crucial to its ongoing product development needs. CEO Fritz Henderson said in June that he anticipated GM will maintain a substantial, but still minority stake in Opel.

At the very least GM is pushing for assurances that it has a major voice in future product decisions, but the company is not commenting on further details of the offers. Increasing the holdings of Magna, with which GM has extensive and long standing business dealings, might be one way to assuage GM’s fears.