REPORT: Opel, waiting on GM and the German government, heading toward bankruptcy
There are five noteworthy parties involved in the negotiations over Opel's fate: GM, the German government, the Opel trust, states with Opel manufacturing plants, and the Opel labor union. The Opel trust is the body created to run Opel after GM's bankruptcy, and consists of five members: a chairman, a representative for the German states with Opel plants, a representative for the German government, and both the CFO and chief negotiator for GM Europe. Got all that?
At this point Opel's future looks to have three possible trajectories: a sale to Magna, a sale to Belgian investment bank RHJ, or bankruptcy. Beijing Automotive also bid on Opel but it hasn't been mentioned in any recent discussions. The negotiating parties, however, haven't come to a decision on which future is the best for the German brand.
GM is still negotiating with Magna, but Magna apparently made promises to its Russian backers -- Sberbank and GAZ -- regarding "intellectual property and [GM's] Russian operations that simply could not be implemented." GM says it doesn't have a preferred bidder, but it's working with Magna to make the Austrian company's bid acceptable. The German states' rep on the Opel trust, and labor are said to prefer Magna win.
On the other hand, the German government rep is said to prefer the offer from RHJ or letting Opel declare insolvency. GM's negotiator said the RHJ tender is "a much simpler structure and would be easier to implement." The hitch could be that the German government's financial assistance to Opel is dependent on a the new buyer having a long term plan for the company and saving German jobs. Those aren't the kinds of terms usually associated with investment banks. According to one German premiere, though, a "clear decision" on Opel should come next week.
[Source: Bloomberg]
Reader Comments (Page 1 of 1)
Kowell 9:48AM (8/03/2009)
"but it's working with Magna to make the Austrian company's bid acceptable"
Isn't Magna a Canadian company?
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Swede 9:56AM (8/03/2009)
Yes, Magna is canadian. But Magna-Steyrs is austrian, and Austria is closer to Germany, makes it easier.
richard 10:00AM (8/03/2009)
Yes. Magna International is based in Aurora, Ontario, just north of Toronto. The founder, Frank Stronach, is Austrian-born, and they have major production facilities in Austria (Magna-Steyr). This may have been enough to confuse Autoblog.
Andrew 10:17AM (8/03/2009)
@Richard
Of course Magna International is Canadian, however Magna Steyr is very Austrian indeed.
It is not just a subsidiary of Magna, it is headquartered in Austria. And they have their own management.
Interestingly it was part of Steyr-Daimler-Puch before Stronach invested with them.
Michael 10:13AM (8/03/2009)
weeeell .. calling it "confused" is maybe going too far.
At least here in Germany, when the negotiations are mentioned in the news, Magna is always called an "austro-canadian" company (which reminds me of a number of hockey players who came to play in Austria in the 80s, but anyway).
I presume European operations are run from Austria, anyway.
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alfonso.pierantonio 11:52AM (8/03/2009)
This affair is very much influenced by politics as the former cancellor Schroeder is very much tighted up with the russians (Sberbank and Gaz) and he probably excercised all his influence in the Bunderegierung.
The real question is whether Magna will be chosen because of its industrial plans or because of Schroeder and if Magna will take Opel over how will survive in a market which will allow only those who produce at least 6 mio cars per year to remain ?
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william tell 12:30PM (8/03/2009)
If Opel go bankrupt aren't they protected by the EU courts?
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Andrew 2:37PM (8/03/2009)
The EU is *not* a federal state, the EU courts only regulate supranational issues. It is still a matter for German courts, and only them.
The EU courts only come in to the picture if the German government were to try saving the company with national funds in conflict with the EU "inner market" rules.
Each EU member state has to refrain from putting national interests above EU competition law. If it cannot be saved within a normal commercial agreement Germany is not allowed to artificially save it.
walt 5:03AM (8/04/2009)
The only logical answer will be for GM to reclaim control of Opel. IMHO GM will keep dragging their feet until their numbers become black and they emerge as the last candidate.
Opel are too small to go it alone and GM needs the designs and technology coming out of Opel. Given the exchange rate importing Opels would only make tactical sense, as with the Buick LaCrosse, but would still be a short term win-win.
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