JOIN USCanada's Magna picks up GM's Opel
The German government, GM and Magna International agreed early Saturday to a plan for Canadian auto parts maker to acquire Opel with Euro 1.5 billion ($2.1 billion) in bridge loans from Germany, while contributing Euro 300 million to keep Opel running in the short term, Finance Minister Peer Steinbrueck told reporters.
“Opel has been given prospects for the future,” Merkel told reporters hours after overnight talks between representatives from the two companies and government officials. “Now the work for Opel and for Magna ... really begins.”
Care of trustee
Under the deal, Magna will take a 20 per cent stake in Opel and Russian-owned Sberbank will take a 35 per cent stake, giving their consortium a majority. GM will retain 35 per cent, and the remaining 10 per cent will go to Opel employees.
The consortium plans to work with Russian car maker Gaz to produce more than a million vehicles in Russia and Eastern Europe. Sberbank’s chairman German Gref praised the deal in an interview broadcast Saturday on Russia’s state-run Vesti TV.
“We think that this is a very good chance for Russia to receive at an unprecedentedly low price one of the most progressive — from a technological standpoint — European automakers,” Gref said.
The deal calls for Opel to be put under the care of a trustee later Saturday, designed to shield it from GM’s likely filing for bankruptcy protection next week.
Other GM Europe assets, including British brand Vauxhall and its plants, were consolidated under the Adam Opel GmbH earlier in the week and will also enter the trusteeship. Sweden’s Saab is not included in the deal.
Opel and Vauxhall have operations in Belgium, Spain and Poland among other countries. The government had stressed the need for a trustee to ensure taxpayer assistance does not flow to GM stakeholders in the US.
“The fault here is ... a major mismanagement in the United States of America by GM,” Merkel said on Saturday. She said she spoke with President Barack Obama by telephone Friday as the deal with Magna was being negotiated.
Parliament nod
Magna co-CEO Siegfried Wolf said he expected the agreements with GM to be signed in five weeks time, but insisted the deal struck on Saturday would prevent Opel from being touched by whatever happens to GM. Parliamentary committees in two states, Hesse and North Rhine-Westphalia, must still approve the financing. That is expected on Sunday. Germany Economy Minister Karl-Theodor zu Guttenberg said he though the plan was risky enough that an “orderly insolvency” could still be the best bet to save Opel.
Job cuts
“I have a different risk assessment than my colleagues participating in the Opel negotiations,” Guttenberg said in a statement. “Certainly an insolvency would also not currently be without risks.”
As part of the deal, all four factories in Germany would stay open though Magna, based in Aurora, Ontario, has said previously it would need to shed some 2,600 jobs. Opel employs 25,000 people in Germany, nearly half of GM Europe’s work force.
German government officials, speaking anonymously because the particulars of the plan have not been announced, said Magna’s plan envisioned between 7,500 and 8,500 job cuts across Europe.
Speaking to reporters in Montreal, Fiat Chief Executive Sergio Marchionne had earlier appeared to concede defeat to Magna, saying his focus was on the company’s deal with Chrysler.
“If Opel transaction is not available to Fiat, life will move on,” he said.