Not the final word in GM’s Magnum Opel

September 10, 2009

GM-OPEL/So German Chancellor Angela Merkel has got her way. After months of pressure from the German government, General Motors has finally caved in and agreed to sell a majority stake in Opel to Canadian car parts maker Magna and Russian backer Sberbank.

It isn’t all over yet — GM is still attaching conditions to the sale of a 55 percent stake in “new” Opel — but the timing of the announcement and the apparently good news for Opel’s 25,000 German employees will be music to Merkel’s ears with just over two weeks to go before a Sept 27. general election.

Merkel says she doesn’t think the GM board’s decision is a delaying tactic, which says a lot about the way the talks have been conducted. But while GM and its chief negotiator John Smith have led Berlin and the various bidders a merry dance, the reality is that the once great U.S. car giant doesn’t really have much of a negotiating position: Opel needs 3.3 billion euros in loan guarantees to keep going. Only Germany is willing to come up with that kind of money.

So for now at least, GM has little choice but to keep Berlin and Opel’s unions happy by opting for Magna rather than Belgium-based financial buyer RHJ International’s bid.

But the fact that GM has not revealed any substantive details about the deal with Magna shows that all is not yet settled. The carmaker says several “key issues” will be finalised over the next few weeks.

Among these are bound to be GM’s deep-seated misgivings about the sanctity of its intellectual property rights under the Magna/Sberbank offer and the nitty-gritty of job cuts.

GM says it has the support of Opel’s unions for a restructuring and now expects a definitive agreement to be signed within a few weeks, with a deal closed in months.

That, of course, will all be after the German elections, when the issue will be less politically sensitive. GM’s Magnum Opel is far from finished.

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