10 September 2009

G.M. Said to Agree to Sell Opel to Magna, With Strings

By The New York Times

General MotorsGeneral Motors told the German government Thursday that it had chosen to sell its European operations to Magna International, the Canadian-Austrian auto parts and engineering company, but with conditions, according to a person close to the decision.

“We have been told that it has finally gone to Magna,” the person said, who requested anonymity since the decision has not been announced. A news conference was scheduled at 4:15 p.m. in Berlin.

However, the person added that conditions have been ttached to what G.M. is offering Magna, conditions that could drag the already lengthy negotiation past Sept. 27, the date of Germany’s national elections.

Magna’s last bid would give it and Sberbank, its Russian partner in the deal, a combined 55 percent stake in Germany-based Opel, the main G.M. operation in Europe, as well as Vauxhall, based in Britain. G.M. would keep a 35 percent stake, while Opel’s employees, who have actively campaigned for Magna, would have 10 percent.

Magna had the support of the Opel works council chairman, Klaus Franz, because it promised to save more jobs and would give Opel greater access to Russia, an expanding market.

The employees and German government officials have firmly opposed a competing bid from RHJ International, a Brussels-based private equity firm, although some G.M. executives appeared, at times, to favor it over the Magna bid because of concern about the Russian involvement.

Since G.M. filed for bankruptcy in June, Opel’s assets have been co-owned by a trusteeship in Germany, with 65 percent, and G.M., which holds the rest..

The decision by G.M. to sell to Magna brings to a close months of drama played out between the German government and Washington but also between the Chancellery and the ministries here in Berlin.

Chancellor Angela Merkel uncharacteristically stuck her neck out in favor of Magna in recent weeks, lobbying in both Washington and Moscow. It was a political gamble, but one she appears to have won.

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