Just hours before General Motors announced that it wasn't going to sell Opel, GM Europe head Carl-Peter Forster said publicly that Opel would be better off under the control of Magna. Talk about bad timing. Now that GM is keeping Opel, Forster is out as the head of the General's European operations. A couple of familiar names will step in, at least on an interim basis.
After months of negotiations with supplier Magna and its Russian partner Sberbank, General Motors has decided not to sell its Opel unit. The General mentioned in the post-jump press release that the new board of directors came to the decision to keep Opel due to GM's recovering financial situation coupled with an improving business environment in Europe. GM's move to keep Opel comes just o
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When GM decided to hand 55% of Opel to Magna, you didn't think the Belgians were just going to have some waffles and call it quits, did you? Oh no. Belgium's prime minister made a call to the EU president about the deal, and the EU Competition Commissioner Neelie Kroes told a Belgian newspaper, "If something happens against the rules, I will take action."
Finally, after what seems like an eternity of protracted negotiations, bickering and stalling tactics, General Motors has agreed to sell a majority stake in its European operations to Magna International and its Russian financial partner Sberbank. Under the terms of the deal, 55% of Opel and Vauxhall will be owned by Magna/Sberbank; The General will hold on to a 35% stake and employees of the two companies will hold the final 10 percent.
While General Motors was going through its 42 day bankruptcy period, one of the stories that didn't receive much play was the sale of GM's Opel brand. The major players in the Opel sale appear to be the German government, Canadian supplier Magna and Belgian private investor RHJ International.
The battle for Opel has added another front: Opel labor unions at two of the company's German factories retracted an agreement made last year to forgo vacation bonuses. The move demands that General Motors pay the laborers €70 million ($100.2M U.S.) by next week, the amount that they agreed to give up when GM was trying to rescue itself. Workers at two other Opel factories in Germany are expected to make the same move some time this week. The workers want GM to sell to Magna, and if The Gen
General Motors was meant to decide who would be the winning bidder for Opel last Friday. But it didn't. Instead, GM asked the German government for more information on federal financial assistance available to buyers. The German government would like Magna to take over Opel as it vowed to retain a huge chunk of jobs in Germany, but GM has given every indication of preferring Belgian investment fund RHJ.
Belgian investment firm RHJ, once considered a back-up bidder for Opel, is now considered a front-runner – at least according to its own CEO. RHJ head Leonhard Fischer has already told U.K. officials that the company is committed to retaining the Vauxhall name, and speaking to German newspaper Handelsblatt, he said he likes his chances in the run for Opel.
Over on General Motors' Europe "Driving Conversations" blog, VP John Smith has posted an update on the company's negotiations to sell a majority stake in Opel and Vauxhall. Although no final decision has been made yet, it's looking increasingly likely that the previous tentative agreement with Magna International may be usurped by a bid from RHJ International. This, despite the fact that the German government has been favoring the Magna bid because of the suppliers commitment to preserving jobs
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?
One of the many clauses that General Motors is reportedly trying negotiate into any deal involving majority control of Opel is the option to eventually buy back the stake it is selling.
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Even though Beijing Automotive (BAIC) tendered a non-binding offer for Opel, the company is said to have no chance of actually acquiring the brand. General Motors is still in talks with Magna and its partners, GAZ and Sberbank, and according to Sberbank CEO German Graf, "The choice has been made and the question now is of how to structure the deal."
Fiat CEO Sergio Marchionne, watching the travails of GM, Opel and Magna from his comfy Italian perch, has sent word that his previous offer for Opel is still on the table if anyone is interested. That offer, though, can't be sweetened because he doesn't "believe we could improve Fiat's offer. It's the most rational one we can put forward from an industrial viewpoint."
When it came to buying Opel, Fiat's Sergio Marchionne told GM and the German government: "If you have a better offer, take it." They both took Magna, along with its Russian partners Sberbank and GAZ, because that consortium offered a better competitive arrangement and fewer job cuts in Germany. The deal wasn't slated to be finished until September, but it's encountered a few pockets of serious turbulence.
Sometimes deals get made, and then the dealmakers have to employ some pretty creative tactics to get the terms to work. Magna's deal for Opel included taking €1.5 billion in short term loans from the German government, the string attached being that Magna had to guarantee German jobs.
If you tried telling us even as recently as a year ago that General Motors would be forced to sell its European assets and that a partnership between a Canadian parts supplier and a Russian bank would step up to take the stake, we'd have probably raised a few eyebrows. But such is the state of the General and the industry at large, with Magna and Sberbank looking poised to take a big chunk of Opel of GM's hands. The question everyone is asking, however, is what the Russian state bank wants with
