Germany not happy with GM abandoning Opel sale
It was an exhausting 7-month process that finally winnowed down a pool of suitors for Opel, General Motors' European subsidiary, to Canadian parts maker Magna and Russian bank Sberbank. The deal was all set to go through, but GM pulled the plug yesterday at the 11th hour, claiming that because of Europe's improving markets and its own better-than-expected financial footing, the automaker could do better for Opel and employees than any of its proposed buyers.
Not so says government officials in Germany, who are reportedly crying in their steins and cursing the day Fritz Henderson was born (we're guessing). Of course, there's money involved, but GM has vowed to pay back the €1.5 billion bridge loan it received from the German government to keep Opel afloat during the selling process. It reportedly only borrowed €1.1 billion and has already paid back €200 million, so Germany is still owed about €900 million.
Aside from the money, German officials and Opel employees in the country are concerned that there will be more job cuts and plant closings by GM than there would have been if the company had been sold to Magna. As such, some of the unions in Germany that had agreed to concessions in order to woo Magna into ownership have vowed not to extend those same concessions to GM.
Outside of Germany, however, GM Europe workers are reportedly happy with the decision to keep Opel in the family fold. Their jubilation stems from fear that had Germany succeeded in brokering the sale of Opel to Magna, other countries like the UK, Spain and Belgium would bear the brunt of restructuring instead of Deutschland. This way, GM is more likely to evenly spread out the costs of restructuring, including job loss, without one region being able to exert too much influence.
[Source: The Detroit News, Automotive News - sub. req'd | Photo by TORSTEN SILZ/AFP/Getty]
Reader Comments (Page 1 of 2)
shirtman 11:27AM (11/04/2009)
You go GM!
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Dev 1:39PM (11/04/2009)
That's what Germany gets for being too greedy and big brotherly in this whole issue! If GM really has to regain its dominance again, it can't afford to lose a fundamentally and strategically strong company like Opel... All the Best GM!
James 5:41PM (11/04/2009)
Get ready for OPC Buicks in the USA!!!!
cdwrx 11:47AM (11/04/2009)
It serves the German government right for meddling in this whole thing. It sounds like the German auto worker unions are taking the high road to the unemployment line.
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jonboy0706 11:50AM (11/04/2009)
Yeah they got what they deserved! They should have a hands off approach like the U.S. gov't did. Oh wait...
Sheepszies 8:33AM (11/05/2009)
Germany's interests were in protecting German jobs, nothing more. Magna made the best offer, with the least job cuts. GM agreed to a sale to Magna, and has now backed out?
That is just bad business.
The US government has given 50 billion dollars to GM, now GM is using taxpayers' money to keep a German company that will most likely require huge amounts of money pumped into it.
I'm going to have to side with Magna and Germany on this one...talk about business ethics!
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Julius 12:00PM (11/04/2009)
Just a thought - where do you think the engineering for the new Lacrosse was done? Especially since it's a redone Opel Insignia? Obviously, GM wants to keep that expertise in the family.
jpm100 12:20PM (11/04/2009)
If GM is no longer burning cash, as alluded to in the article, then a fire sale on Opel is not in GM or the US taxpayer's best interest.
Throwback 12:08PM (11/04/2009)
Smart move if you want to be a global company. However where is GM getting €900 million? Oh yeah, I forgot the tax payer credit card.
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Andrew 9:28PM (11/04/2009)
Hmm, yeah, because they can't make any money in Germany...
mesama 12:24PM (11/04/2009)
I'm impressed by how the US govt involvement was much more long-sighted than the German govt. The Auto Task Force pushed the GM board to make tougher concessions to be viable, whereas the German case has just been about saving jobs and getting votes.
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PercyPricksworth 1:05PM (11/04/2009)
You forget a tiny but important detail. Obama was already elected whereas Angela Merkel had serveral months to "act" the worrying politician until the election of the Bundestag.
It worked pretty well, she is chancellor now and Opel of no importance to her. ;)
Trust me, Obama or McCain wouldn't want to make voters angry, too if a presidential election would be held in 2010.
Dave 12:31PM (11/04/2009)
"Aside from the money, German officials and Opel employees in the country are concerned that there will be more job cuts and plant closings by GM than there would have been if the company had been sold to Magna. As such, some of the unions in Germany that had agreed to concessions in order to woo Magna into ownership have vowed not to extend those same concessions to GM."
Can you say "self fulfilling prophecy," boys and girls? I knew you could.
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Avinash machado 12:51PM (11/04/2009)
Don't cave in,GM.
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Richard S. 1:20PM (11/04/2009)
Germany wanted to 2 things: 1)to save as many German jobs as possible (at the expense of Belgians, Spanish and British workers), and 2)to bring back Adam Opel AG to German-onwership. Opel is a big seller not only in Europe but in Germany as well. Why have Opel repatriate profits to Detroit when they can stay in Germany.
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LIP 1:01PM (11/04/2009)
This is one of the more unethical moves by a company in some time...
Lets hope the largest economy in Europe speaks with their wallets in the future regarding Opel sales and seals the casket for GM in Europe.
If it was not for the workers, I would like to see GM continue to fall to pieces in the future...what a joke of a company...
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Jimbo 2:17PM (11/04/2009)
How exactly is this unethical? GM has done their due diligence, evaluated buyers, and decided that the best approach is not to sell. That sounds like completely ethical reasoning to me.
Face it, GM owns Opel fair and square. They have every right to do with it what they want, within the limits of the law. If the German unions have a hissy fit, then GM will just move production to their other European plants, or do like Ford and move produciton to the U.S.
Swede 4:28PM (11/04/2009)
Jimbo: Dont know about you but I call saying one thing and then doing the opposite unethical.
Jimbo 8:55PM (11/04/2009)
They have every right to change their mind. The deal wasn't finalized and there was no binding contract. They may have issued a letter of intent or identified a preferred buyer, but those are not binding contracts.
Let's say you put your house up on the market because you can no longer afford it and you have someone very interested in buying it. If your financial situation improves and you haven't signed a contract, you have every right to withdraw it from the market. There is no difference here.
madtuscan 1:07PM (11/04/2009)
GM, very bad taste!
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