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Report: General Motors Considering Keeping European Opel Unit

Earlier this week, GM announced "no decision" on which of the two rival bidders would get Opel

 |  Aug 25 2009, 10:11 AM

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After announcing earlier this week that it has not reached a deal to sell Opel, General Motors is now apparently exploring options to keep the European unit.

This news comes as a surprise considering selling off Opel is a part of the company’s viability plan as submitted to the U.S. government in order to receive $50 billion in funding. In order to do so GM would reportedly need to raise $4.3 billion, which seems unlikely for a company that is still suffering from decreased sales and has only recently emerged from bankruptcy.

Earlier this week GM announced that it did not come to a decision on which of the two rival candidates it woud choose to sell Opel to. GM has received significant pressure from the German government to accept a deal from Canadian autoparts maker Magna Internatinal, but board members have been opposed to the deal, mostly because it could provide some of Magna’s Russian backers with technology that would allow them to compete with GM.

The German government favors the Magna deal over competing bidder RHJ International because Magna has agreed to keep jobs in Germany. The German government is offering $6.4 billion in loans to help the Magna purchase go through.

Apparently a new deal by RHJ would allow GM to keep some control over Opel and even allow the automaker to buy it back.

GM board members are currently in talks with the German government, where the Opel situation has become a national issue in the country’s upcoming elections. GM’s best case scenario would see the German government secure loans under a sale to RHJ, but so far German Chancelor Angela Merkel has not shown any interest in RHJ.

[Source: The Detroit News]