GM Deal For Opel Moves Closer To Finish Line
July 17, 2009
Canadian auto supplier Magna International and Belgian financial investor RHJ International
SA are have the inside track for the purchase of General Motors' Opel division as the automaker reviews all final bids in Germany early next week.
GM Executive Nick Reilly said in a Bloomberg Television interview from his Shanghai headquarters Friday that that a decision may come next week and Magna and RHJ are "probably the front runners" for Opel.
GM signed a non-exclusive memorandum of understanding with Magna but apparently has asked for final proposals from Magna and RHJ, to be reviewed next week. Beijing Automotive Industry Holding Co. (BAIC) may submit a final offer as might Italy's Fiat.
The German government, which is being asked for $2-billion in short-term loans for the Opel sale, appears to favor Magna, even though the Magna deal will cost more jobs and cost the government more money. The Magna deal also includes Russian lender OAO Sberbank. The Magna deal seems to have hit some roadblocks in terms of access to markets, specifically Chevrolet distribution in Russia, and technology.
A German government official told Bloomberg RHJ is moving up in consideration. RHJ, which is requesting less state aid for the deal than is Magna, intends to cut fewer jobs in Germany, instead closing Opel's plant in Antwerp, Belgium.
GM's Reilly has become the automaker's point man on Opel after being promoted last Friday from vice president of Asia Pacific of the old GM to executive vice president of the new GM's international operations, effective in August.
Under any deal, GM intends to keep a nearly 40-percent stake in Opel, with employees owning 10 percent in exchange for cost cuts.
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