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| Canada's Magna, Russian bank reach tentative deal for Opel |
| Press Trust of India / New York May 30, 2009, 14:51 IST |
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Canada-based autoparts maker Magna International and Sberbank of Russia have reached a tentative deal to acquire the European operations of US car maker General Motors, says a media report.
"The global reordering of the auto industry took a big step forward on Friday as an unlikely alliance led by Magna International, a Canadian auto parts maker, and Sberbank of Russia tentatively agreed to buy the European operations of General Motors," The New York Times has reported.
The daily said the deal was brokered by the German government in Berlin, with negotiations stretching from Moscow to Washington, Detroit, Ontario and New York, where GM's board gathered for a meeting ahead of an expected bankruptcy filing on Monday.
According to the report, a final deal would lift Magna, whose specialty is making parts and assembling vehicles for other automakers, into the role of manufacturer.
"Under the terms of the deal, as initially proposed by Magna, GM would retain a 35 per cent stake in the new company, with Sberbank, a bank controlled by the Russian government, taking 35 per cent, Magna holding 20 per cent and Opel's employees controlling the remaining 10 per cent.
"While Sberbank’s stake is larger, Magna, along with GM Europe's executives, would supply the carmaking expertise to the new company," the publication noted.
According to the report, Italian car maker Fiat had hoped to grow into a top-tier global company virtually overnight, with its nearly-completed alliance with Chrysler and by buying GM of Europe, which includes Opel of Germany as well as the British auto company Vauxhall.
"Now, with Fiat apparently losing out to Magna for GM's European operations, prospects for Chrysler's long-term future could darken," it added.
The New York Times said that a deal for GM's European operations could resolve an important issue for the battered auto maker and help speed its restructuring in bankruptcy court, which appears all but certain.
Meanwhile, Russia's news agency reported that Magna International, backed by Russia's largest state-run retail bank -- Sberbank and Russian GAZ group, reached a deal early today for the takeover of Opel car maker, part of the US auto giant GM.
With General Motors expected to file for bankruptcy in the coming days, the move is seen as a lifeline for some of the 55,000 GM workers across Europe. However, Magna is expected to slash some 10,000 jobs, 2,500 are due to go in Germany, it said.
"We have an agreement," the newswire quoted German Finance Minister Peer Steinbrueck as announcing after protracted late-night negotiations in Berlin between US and German government officials, GM and Magna.
Magna has said it will invest more than $700 million in Opel, which along with the Vauxhall brand, employs more than 25,000 people in Germany alone.
It is expected that Magna will use Opel to move more of its operations into Russia, one of the fastest-growing car markets in the world.
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