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The sale of GM’s European Opel division to Russian-backed Canadian autoparts maker Magna has been put on hold. The on-again, off-again saga is off-again as GM board is set to meet on November 3rd to review changes to the agreement.
The changes, include a request by the German Economy Minister to GM, asking the company to clarify that the decision to choose Magna over rival Belgian bidder RHJ International was due to business and not political reasons. That may be difficult for GM to do as the German government had promised a significant loan to Opel if Magna was chosen, with the understanding that Magna’s proposal would keep more jobs in Germany.
Recently the European Commission put pressure on the German government to clarify that the proposed aid was available to any bidder and not just to Magna – which it seems was not the case. If the German government changes its tune, that may cause GM to favor Magna’s Belgian competitor and put the entire deal in jeopardy.
[Source: Automotive News]
After continued rumors that General Motors was still shopping-around its European Opel operations, it appears as though a new buyer has been found. RHJ International, a Belgian company has been cited as the latest bidder and apparently a tentative deal could be signed by the end of the week.
Initially Opel was slated to be sold to Canadian autoparts manufacturer Magna International, but those plans have hit several roadblocks. Magna’s deal did not guarantee the same amount of job protection to Opel’s German workforce and so it put in jeopardy a $2.1 billion loan from the German government. Additionally, GM was not excited about the prospect of handing over its technology so that Magna and Russian partners Sberbank and GAZ could use it to build vehicles for the Russian market.
The deal put forward by RHJ, on the other hand, is more likely to be attractive to the German government and GM would not have to fear competition in the Russian marketplace.
According to the Financial Times, however, the RHJ deal is more attractive because of one factor, the price. An initial bid by the holding company had GM sign an agreement with Magna instead, but apparently RHJ has now upped its offer.
According to the Financial Times, GM could sign tentative agreements with both companies, meaning that the sale of Opel to Magna is not completely out of the question.
One of the other Opel bidders, China’s Beijing Automotive Industry Corp., is also expected to make GM a more attractive offer in the near future.
So it looks like Opel is in hot demand and GM is back in the driver’s seat as it looks to get the most for its European operations and emerge from bankruptcy in the best financial state possible.
[Source: Automotive News]