Germany backs Magna, wants talks with GM on Opel

25th August 2009, Comments 0 comments

Germany, where around half of GM's 50,000 European employees work, had hoped that GM executives would choose an offer for Opel from Canadian auto parts maker Magna and state-owned Russian lender Sberbank.

Berlin -- Germany called Monday for immediate talks with GM to explain why it has not yet chosen a buyer for European unit Opel as the finance minister warned there would only be aid for its favoured candidate.

"Our aim is to organise a meeting this week in Berlin with a representative from General Motors' board," government spokesman Ulrich Wilhelm told a regular briefing after GM did not come to a decision on Friday.

"In recent weeks we have been able to clear up most of the open questions. Germany has done its homework ... There are two contracts ready to be signed.

"The decision to sell is GM's alone. But a sale will only work if the buyer can secure guarantees or aid from Germany and other European countries where Opel and (British arm) Vauxhall have plants," Wilhelm said.

Germany, where around half of GM's 50,000 European employees work, had hoped that GM executives would choose on Friday an offer for Opel from Canadian auto parts maker Magna and state-owned Russian lender Sberbank.

GM's board is widely believed to prefer a rival bid from Brussels-based investment group RHJ International, reportedly because of fears that valuable technological know-how might end up in the hands of Russian carmakers.

GM, which is majority owned by the US government since the firm's bankruptcy in June, is also said to find RHJ more attractive because it would make a repurchase of Opel easier when times get better.

German Finance Minister Peer Steinbruck charged that this was now the case and warned there would be no German government aid for RHJ.

"My impression is that some people at the heart of GM management prefer the RHJ International offer because it would make it easier to buy back Opel in a few years time," Steinbruck told the Handelsblatt daily to appear Tuesday.

"Magna, in our view, has a clear industrial strategy, not just a plan for short-term gain and that is why the government will not give any financial aid to RHJ," he told the newspaper. "Aid will only be given to Magna."

Some analysts believe GM wants to keep its options open on Opel as quitting Europe could prove costly in the long-term, leaving it heavily reliant on its North American and Chinese markets.

The Wall Street Journal reported late Monday that GM was trying to develop a 4.3 billion-dollar financing plan that would allow it to keep control of loss-making Opel and its British affiliate, Vauxhall, which form the core of the company's European operations.

GM chief executive Fritz Henderson "is supposed to have the plan done by the board's next regularly scheduled board meeting in early September," the newspaper said on its website, citing three people involved in the matter.

The paper also said the board turned down the Magna deal on Friday "raising questions about how such a sale would affect GM's strategy in Europe, and also voicing concern about specific details related to the German government's financing commitment."

The White House on Monday rebuffed German government pressure saying President Barack Obama's "view is that decisions made about the day-to-day operations at General Motors should be made by the folks at General Motors."

"He never wanted to get into the auto business, and he's happy for them to make their decisions and get back on their feet," said White House deputy spokesman Bill Burton.

Berlin has offered 4.5 billion euros (6.4 billion dollars) worth of financing to support an Opel sale, to the annoyance of other European governments such as Britain.

Germany -- with elections to be held on September 27 -- supports Magna because it believes that the bulk of job cuts and plant closures that it will make in an attempt to make Opel profitable will happen in other countries.

AFP/Expatica

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