Magna Closing In On Opel- US-FOREX.US
The Adam Opel saga is finally coming to an end. Canadian auto parts supplier Magna has reached an agreement in principle with General Motors’ management over a contract to buy a stake in General Motors’ European unit Opel, according to reports.The news follows weeks of constant bickering between the bidders – including Italy’s Fiat and private equity fund RHJ International – as they tried to strike a deal with the struggling carmaker. Fiat
was swiftly ruled out as it was proposing to cut more jobs than the rest. On Thursday Magna
Co-Chief Executive Siegfried Wolf told Reuters the last sticking points in a potential deal had been resolved and that Magna and GM need to approve the deal before trustees formerly in control of a 65% stake in Opel can give their final consent. At the time of writing, Magna was unreachable for comment. The lack of details disclosed on the Magna and RHJ offers had made it difficult to judge the outcome. However, both bidders had to improve their offers, and according to Gregor Claussen, an analyst with Commerzbank, GM had favored RHJ while German politicians – Chancellor Angela Merkel included – had favored Magna. “[This is] probably because Magna’s bid allowed for less dismissals in German factories,” said Claussen. Opel has been a hot political topic, as it employs a total of 54,500 workers across Europe, with 25,000 in Germany. Berlin has played an increasingly central role in the negotiations and Merkel backed Magna publicly several times. In July, Merkel’s spokesman Ulrich Wilhelm even said that the German government had a preference for the Canadian company’s plan, which is also backed by the four German states where Opel has plants and by the carmaker’s unions.”At first glance a deal with Magna smells a bit like a political solution. But we will have to see what the offerings from Magna and RHJ looked like,” said Claussen.
However, a deal with the Canadian firm could rile GM
,which has expressed its reservations about a deal with Magna on the grounds that its proprietary technology in Opel is protected in any partnership. GM has also said that the Opel sale was not expected to be reopened to any party beyond Magna and RHJ.Of course the deal that Magna – and its Russian partner Sberbank – has struck does not necessarily mean that competing Opel bidder RHJ International is out of the race entirely. According to some media reports, RHJ might be ready to sweeten its offer for Opel.
One source told Reuters the private equity firm is prepared to seek less than 3 billion euros in state aid for the deal, over 800 million euros less than it originally sought.
Thomson Reuters contributed to this article.