General Motors has decided to keep it’s European operations after all. GM has announced that due to the improved economy and improvements in the company’s bottom line, it will not sell off Opel and British automaker Vauxhall.
General Motors had been negotiating to sell the group to a Russian-backed group fronted by Canadian autoparts maker Magna International.
“GM’s overall financial health and stability have improved significantly over the past few months, giving us the confidence that the Euroean business can be successfully restructured,” said CEO Fritz Henderson.
GM’s initial plan is to begin a $4.43 billion restructuring effort and says it will work with European labor unions to make it happen. It is not clear if the European Union’s efforts to block the sale to the Canadian held Magna, over a Belgian group had anything to do with the decision. Initially the Magna deal was preferred by the German government as the Candian company agreed to keep most of Opel’s work force in Germany, in exchange for a secured loan. No doubt GM will still be looking for a similar sized loan now.
GM made the decision contrary to its viability plan that was agreed upon wit the U.S. government, stating that Opel is outperforming the assumptions made in that plan.
“This was deemed to be the most stable and least costly approach for securing Opel/Vauxhall’s long-term future,” said Henderson.
[Source: Automotive News]