A major game of poker is in train here! The deal may yet go through but Germany has gambled high stakes and may have overplayed its hand. Opel has lost share in Germany and today GM’s best Euopean market is Britain. In addition Opel itself cannot produce Right-hand-drive cars whereas Vauxhall can switch easily from Left to Right-hand.
The Americans are extremely worried too that the Magna deal favoured by Merkel involves too close a tie to Russian manufacturers.
Christina
TELEGRAPH
25.8.09
Vauxhall in limbo as GM and Germany clash
The future of Vauxhall was in limbo on Monday night as tensions grew between General Motors and Germany, with union leaders threatening "spectacular measures" if a deal is not agreed this week.
By Graham Ruddick
GM executives will meet German officials in Berlin for talks this week. Sources close to the company insist it is still keen to find a partner for its European operations.
However, the US car-maker is becoming increasing confident in negotiations after a successful restructuring while in Chapter 11 bankruptcy protection and a boost to European car sales from scrappage schemes.
The company wants to avoid offloading its assets cheaply as the market shows signs of improvement, and is demanding more information from Germany on how it would support a deal. However, Chancellor Angela Merkel's government, which is supporting Opel with a €1.5bn (£1.3bn) bridging loan, is pushing for a quick conclusion with elections due next month.
Ms Merkel is ready to financially support a bid from car parts group Magna, although GM has doubts about Magna's plans to expand into Russia.
Opel workers, desperate for their future to be confirmed, could demand holiday bonuses totalling €70m which they had previously agreed to forgo if a deal is not struck very soon. Union boss Klaus Franz warned: "Our patience is absolutely at an end." [Hitler’s favourite expression was always “My patience is exhausted” before launching his next invasion - cs]
Government spokesman Ulrich Wilhelm said: "This issue can be resolved not through confrontation, but only together."
Given Berlin's support for Magna, GM believes that it has two options – the Magna bid with support of up to €4.5bn from Germany or an alternative plan, potentially with rival bidder RHJ International, which involves keeping a larger stake in the business
FINANCIAL TIMES
25.8.09
GM looks at shelving Opel plan
By John Reed in London
General Motors is looking at shelving a German-backed bailout of its Opel European car arm amid growing fears that long-running talks on the deal will end in failure.
The US carmaker and its advisers are studying a scenario that would see GM abandon the German plan and instead raise roughly €3bn ($4.3bn) of rescue funds for Opel and its British Vauxhall brand from the US and other European governments, including the UK and Spain.
GM agreed to spin off the Opel division before the troubled company went into bankruptcy earlier this year.
Germany, keen to protect its thousands of Opel workers, agreed to bankroll a bid, and lined up behind Canadian parts maker Magna International and Russia’s Sberbank. The management of GM, which emerged from bankruptcy in July, believes that the terms of the Magna bid are too onerous, and a rival bid from RHJ, a Brussels-based industrial group, would be easier to implement.
“Germany have expressed interest in having Magna, but there might be other [financing] sources,” a person with knowledge of GM’s plans said on Monday. “This is what we are currently exploring.”
This person said that GM’s board had made no final decision, but had expressed interest in studying what was described as an “extreme solution” to the German rescue of Opel/Vauxhall, which employs about 55,000 people and has plants in five European countries.
A second person familiar with GM’s plans described the option as “feasible if complex”.
Were GM to abandon the German-backed sale process, it would be an embarrassment for Angela Merkel’s government.
However, it is unclear whether GM would succeed in raising the funds needed to keep Opel afloat from the UK government and others.
John Smith, GM’s chief negotiator, is due to hold further talks with government officials in Berlin this week.
GM’s new board last week refused to endorse Magna’s bid with Russian Sberbank to buy 55 per cent of Opel, angering Angela Merkel’s government and Opel’s unions, which support the bid.
Klaus Franz, Opel’s union chief, on Monday warned that employees could take “spectacular measures” if GM made no decision on the sale by the end of this week.
Germany favours Magna’s bid over RHJ International because it thinks it would entail fewer job losses and has hinted that it would offer loan guarantees only for Magna’s bid.
GM sees Magna’s bid as untenable because it would give the Canadian supplier and its partners unfettered access to its global intellectual property and Russian operations.
GM declined to comment on the sale on Monday.
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