chiefpontiac
09-10-2009, 03:39 PM
THE OPEL NEGOTIATIONS
GM to sell 55% stake in Opel to Magna and Sberbank
September 10, 2009 - 12:01 am ET
UPDATED: 9/10/09 3:12 p.m. ET
MUNICH -- General Motors agreed to sell a 55 percent stake in Opel to a group led by Canada's Magna International Inc., after months of fraught negotiations that had weighed on the European unit and its 50,000 workers.
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The decision, after a two-day meeting of GM's board in Detroit, was welcomed by German Chancellor Angela Merkel who had lobbied for the Russian-backed Magna bid and could get a boost from GM's choice in the run-up to an election on Sept. 27.
“The hard work over the past two weeks to clarify open issues and resolve details in the German financial package brought GM and its board of directors to recommend Magna/Sberbank,” GM CEO Fritz Henderson said in a statement.
GM will “continue to closely collaborate with Opel and Vauxhall to develop and produce more great cars, such as the new Insignia and the new Astra,” Henderson said.
The Opel sale marks the latest move in the U.S.-ordered restructuring of GM after it spent 39 days under U.S. Bankruptcy Court protection this summer. GM also is shutting down the Pontiac brand, selling its Saab and Saturn units, and terminating about 2,000 U.S. dealerships.
The deal also represents a victory for Russia, whose government had pushed aggressively to secure itself a foothold in the rapidly consolidating global car market.
Talks on Opel, control of which GM is giving up as part of a U.S. government-orchestrated restructuring, had dragged on for months, fueling anger among the carmaker's staff, half of whom are in Germany.
Under the Magna deal, GM will retain a 35 percent stake in Opel, with Magna and its Russian partner, state-owned bank Sberbank, taking 27.5 percent apiece, and workers the remaining 10 percent.
"I am very happy about this decision. The government's patience and purpose has paid off," said Merkel, describing the deal as a "new beginning" for Opel.
GM opted for the bid by Magna and its Russian partners, Sberbank and GAZ, over a rival offer from Belgium-listed investor RHJ International.
The decision was approved by a trust set up to shield Opel while GM went through bankruptcy proceedings, but the trust's board did not back the deal unanimously, highlighting divisions about the logic of Magna's plan.
Deal not yet done
Sberbank CEO German Gref said the deal's structure was "unprecedentedly complicated" and Thursday's announcement by GM was an important intermediate step but not a final one.
Elsewhere, Opel trust board member Manfred Wennemer, the former head of auto supplier Continental AG, expressed doubts about whether Magna could make Opel competitive and said the risks of the deal lay with German taxpayers.
Germany had promised 4.5 billion euros ($6.6 billion) in government guarantees if GM opted for Magna, while refusing to support the rival bid from RHJ.
Auto analysts were also skeptical, describing the decision to sell to Magna as political.
"This is an industry that is burdened with excess capacity and we've just passed through one of the best opportunities in over a decade to see real capacity taken out of the industry," said Michael Tyndall, an analyst at Nomura International.
GM has controlled Opel, which traces its roots in Germany back to the 19th century, for the past 80 years.
Based in the western city of Russelsheim, it has four plants in Germany that make everything from the three-door Corsa subcompacts to Zafira vans, two factories in Britain under the Vauxhall badge, and major sites in Belgium, Poland and Spain.
"It's a relief that there is now a decision," said Anke Rezac, who works in vehicle electronics at Opel's development centre in Ruesselsheim.
"We now have less uncertainty surrounding ownership although many questions remain. Among all the bad choices we had, Magna is the best option. They know about the auto industry and want to develop the business."
Big German presence
GM said a definitive agreement should be ready to sign in a matter of weeks and predicted the deal would close no later than Nov. 30.
"Magna brings with it an understanding of how to cooperate with other companies. Magna understands the auto business. These are all positive elements," said GM Europe head Carl-Peter Forster.
GM was reported to have concerns about its ability to control its intellectual property and vehicle technology in the Russian partnership and some of its senior management had said the rival bid by RHJ would be easier to implement.
Members of the GM board considered scrapping the sale altogether and keeping hold of Opel, sources told Reuters. But that would have required GM to raise billions of euros and turn its back on the guarantees offered by Berlin.
GM said several key issues needed to be finalized to get the Opel deal with Magna done but chief negotiator John Smith described them as "garden variety" issues which should be overcome easily.
The deal is a coup for Magna founder and chairman, Frank Stronach, a toolmaker who left Europe half a century ago to start a company that has become one of the world's biggest automotive suppliers.
Magna and its Russian partners have vowed to inject 500 million euros into Opel, which they want to use to make an aggressive push into the Russian market.
They plan to cut 10,000 European jobs, a quarter of those in Germany, but have committed to keeping all the German plants running. Opel's Antwerp plant in Belgium and Vauxhall sites in England are seen at risk.
[URL="http://www.autonews.com/section/contact01"]Contact Automotive News (http://sec.crain.com/an/QuickOrder.aspx?p=W8ANrsb)
GM to sell 55% stake in Opel to Magna and Sberbank
September 10, 2009 - 12:01 am ET
UPDATED: 9/10/09 3:12 p.m. ET
MUNICH -- General Motors agreed to sell a 55 percent stake in Opel to a group led by Canada's Magna International Inc., after months of fraught negotiations that had weighed on the European unit and its 50,000 workers.
[/URL]
The decision, after a two-day meeting of GM's board in Detroit, was welcomed by German Chancellor Angela Merkel who had lobbied for the Russian-backed Magna bid and could get a boost from GM's choice in the run-up to an election on Sept. 27.
“The hard work over the past two weeks to clarify open issues and resolve details in the German financial package brought GM and its board of directors to recommend Magna/Sberbank,” GM CEO Fritz Henderson said in a statement.
GM will “continue to closely collaborate with Opel and Vauxhall to develop and produce more great cars, such as the new Insignia and the new Astra,” Henderson said.
The Opel sale marks the latest move in the U.S.-ordered restructuring of GM after it spent 39 days under U.S. Bankruptcy Court protection this summer. GM also is shutting down the Pontiac brand, selling its Saab and Saturn units, and terminating about 2,000 U.S. dealerships.
The deal also represents a victory for Russia, whose government had pushed aggressively to secure itself a foothold in the rapidly consolidating global car market.
Talks on Opel, control of which GM is giving up as part of a U.S. government-orchestrated restructuring, had dragged on for months, fueling anger among the carmaker's staff, half of whom are in Germany.
Under the Magna deal, GM will retain a 35 percent stake in Opel, with Magna and its Russian partner, state-owned bank Sberbank, taking 27.5 percent apiece, and workers the remaining 10 percent.
"I am very happy about this decision. The government's patience and purpose has paid off," said Merkel, describing the deal as a "new beginning" for Opel.
GM opted for the bid by Magna and its Russian partners, Sberbank and GAZ, over a rival offer from Belgium-listed investor RHJ International.
The decision was approved by a trust set up to shield Opel while GM went through bankruptcy proceedings, but the trust's board did not back the deal unanimously, highlighting divisions about the logic of Magna's plan.
Deal not yet done
Sberbank CEO German Gref said the deal's structure was "unprecedentedly complicated" and Thursday's announcement by GM was an important intermediate step but not a final one.
Elsewhere, Opel trust board member Manfred Wennemer, the former head of auto supplier Continental AG, expressed doubts about whether Magna could make Opel competitive and said the risks of the deal lay with German taxpayers.
Germany had promised 4.5 billion euros ($6.6 billion) in government guarantees if GM opted for Magna, while refusing to support the rival bid from RHJ.
Auto analysts were also skeptical, describing the decision to sell to Magna as political.
"This is an industry that is burdened with excess capacity and we've just passed through one of the best opportunities in over a decade to see real capacity taken out of the industry," said Michael Tyndall, an analyst at Nomura International.
GM has controlled Opel, which traces its roots in Germany back to the 19th century, for the past 80 years.
Based in the western city of Russelsheim, it has four plants in Germany that make everything from the three-door Corsa subcompacts to Zafira vans, two factories in Britain under the Vauxhall badge, and major sites in Belgium, Poland and Spain.
"It's a relief that there is now a decision," said Anke Rezac, who works in vehicle electronics at Opel's development centre in Ruesselsheim.
"We now have less uncertainty surrounding ownership although many questions remain. Among all the bad choices we had, Magna is the best option. They know about the auto industry and want to develop the business."
Big German presence
GM said a definitive agreement should be ready to sign in a matter of weeks and predicted the deal would close no later than Nov. 30.
"Magna brings with it an understanding of how to cooperate with other companies. Magna understands the auto business. These are all positive elements," said GM Europe head Carl-Peter Forster.
GM was reported to have concerns about its ability to control its intellectual property and vehicle technology in the Russian partnership and some of its senior management had said the rival bid by RHJ would be easier to implement.
Members of the GM board considered scrapping the sale altogether and keeping hold of Opel, sources told Reuters. But that would have required GM to raise billions of euros and turn its back on the guarantees offered by Berlin.
GM said several key issues needed to be finalized to get the Opel deal with Magna done but chief negotiator John Smith described them as "garden variety" issues which should be overcome easily.
The deal is a coup for Magna founder and chairman, Frank Stronach, a toolmaker who left Europe half a century ago to start a company that has become one of the world's biggest automotive suppliers.
Magna and its Russian partners have vowed to inject 500 million euros into Opel, which they want to use to make an aggressive push into the Russian market.
They plan to cut 10,000 European jobs, a quarter of those in Germany, but have committed to keeping all the German plants running. Opel's Antwerp plant in Belgium and Vauxhall sites in England are seen at risk.
[URL="http://www.autonews.com/section/contact01"]Contact Automotive News (http://sec.crain.com/an/QuickOrder.aspx?p=W8ANrsb)