Germany postpones decision on Opel bidder

28th May 2009, Comments 0 comments

The government had said it would decide on Wednesday which of the three offers on the table it liked best: Fiat, Magna or RHJ International.

Berlin -- Germany poured cold water on Wednesday on expectations it was about to pick its preferred bidder for Opel amid pressure from EU partners and as parent company GM careered closer to bankruptcy.

"It is probably unlikely that the result tonight will be that future talks will then be pursued with just one partner," government spokesman Thomas Steg told a regular press briefing.

"What is more likely is that after this evening's talks with all parties, future talks... will be continued with at least two potential investors," Steg said.

Chancellor Angela Merkel's government had said it would thrash out at a crunch evening meeting, lasting until the early hours if necessary, which of the three offers on the table it liked best: Fiat, Magna or RHJ International.

Fiat wants to combine General Motors' European and Latin American operations with Chrysler, in which it has secured a 20-percent stake, to create the world's second largest automaker after Toyota of Japan.

Canadian car parts maker Magna has teamed up with Russia's top bank, state-controlled Sberbank, for a bid that would see precious metals tycoon Oleg Deripaska's truck company GAZ making Opel vehicles in Russia.

Brussels-based RHJ International, the third bidder, owns stakes in auto parts firms including Niles and Asahi in Japan, Belgium's Honsel, as well as in Columbia Music Entertainment.

Magna, which already assembles Saab, BMW and Mercedes vehicles under licence and which offered to buy Chrysler from Daimler in 2007, was seen as the favourite in Berlin and Detroit.

Merkel is under pressure from unions, key local state premiers and from members of her own governing coalition to plump for the Canadian bid, seen as the offer likely to result in the fewest jobs lost.

The Italian bid fell foul of Opel's powerful union bosses as details leaked out of sweeping job cuts. Fiat boss Sergio Marchionne held last-gasp talks with Merkel on Tuesday to push his offer.

The final decision on which bid will triumph lies with GM and the US government.

Germany, where GM has most of its European factories and employees, has a key role to play by offering billions of euros (dollars) in loan guarantees to stop 25,000 employees there losing their jobs four months before elections.

A fourth bidder -- China's Beijing Automotive Industry Corporation (BAIC)-- has also emerged, the German government confirmed on Wednesday.

However, Steg said the Chinese bid had come too late for them to have a place at the table for tonight's talks but did not rule out negotiations with BAIC at a later date.

Germany also came under pressure from other European countries, with Britain and Belgium pressing Berlin not to strike a deal that would protect German workers at the expense of GM Europe workers elsewhere.

The European Commission also called for a meeting of European finance and industry ministers on the issue "as soon as possible."

Meanwhile in the United States, GM hurtled closer to the abyss as it announced it had failed to win sufficient support from its bondholders for a crucial deal to swap debt for equity.

GM was widely expected to file for bankruptcy protection ahead of a June 1 deadline imposed by the administration of President Barack Obama, which has providing the automaker with billions of dollars in emergency loans.

The debt exchange was one of several moves by GM to shore up its finances and avert bankruptcy.

In a move that protects Opel in the event of a GM bankruptcy, an Opel spokesman told AFP that GM had transferred to it control of its European factories and valuable patents.

Simon Sturdee/AFP/Expatica

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