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| GM to keep Opel in break from post-bankruptcy plan |
| Bloomberg / Berlin Nov 05, 2009, 00:21 IST |
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Sets aside an agreement to sell 55% of the Germany-based firm.
General Motors Co’s board voted to keep its Opel unit rather than sell a majority stake to Magna International Inc and partner OAO Sberbank, citing an improving economy and the brand’s strategic importance.
The decision sets aside an agreement to sell 55 per cent of Ruesselsheim, Germany-based Adam Opel GmbH to Magna, Canada’s largest car-parts maker, and Sberbank, Russia’s biggest lender. GM expects about 3 billion euros ($4.42 billion) in expenses to restructure the money-losing unit and its UK twin Vauxhall.
Retaining ownership of Opel marks the second shift in GM’s post-bankruptcy plan for unloading unprofitable divisions. Detroit-based GM said on September 30 it would wind down the Saturn brand after a sales agreement with retailer Penske Automotive Group Inc fell through.
“It’s the worst decision for GM,” Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen said. Without the support of workers and Magna’s assistance in expanding in Russia, Opel will “have fewer chances to survive,” he said.
GM was given an opportunity to reconsider the Magna deal after the European Union expressed concerns that Germany had improperly influenced the choice of buyer. Germany told GM that financing wasn’t reserved only for Magna, prompting the review by the carmaker’s board.
German Chancellor Angela Merkel had lobbied for the sale to Aurora, Ontario-based Magna since May, aiming to preserve jobs. GM notified Magna, Merkel and other European government officials before Tuesday’s announcement, said a person familiar with the discussions.
“I have serious concerns about the future of the company and its jobs,” Roland Koch, prime minister of Hesse, Opel’s home state, said in a statement, adding that he was “angry” about the decision.
Merkel was in Washington to give a speech to Congress and meet President Barack Obama at the White House, and her plane left for Berlin around the time of GM’s announcement.
The German government, in an e-mailed statement, called on GM to repay 1.5 billion euros that had been provided for Opel. The request to repay the loan by the end of November is according to the conditions of the loan, the government said.
Klaus Franz, Opel’s top labor leader, said workers wouldn’t contribute to a GM-led restructuring and demanded the disbursement of deferred wages such as vacation pay.
“We will not actively engage in crafting a route back to General Motors, rather we will focus on our classic role of protecting the workforce.” Franz said in a statement.
GM’s continued control of Opel is a “gain in terms of lowering risk on technology and platforms,” said Michael Robinet, an analyst for consultant CSM Worldwide in Northville, Michigan. “But they lose in terms of exposure to a European market that next year could be somewhat weaker.”
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