Commentaries

Now raising intellectual capital

Not the final word in GM’s Magnum Opel

Photo
-

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.

Saab to Koenigsegg – another go slow GM sale

Photo
-

AUTOS SWEDEN KOENIGSEGGGeneral Motors doesn’t do deals in a hurry — at least when it is selling.

With the Opel sale grinding along, the U.S. automaker is also in the process of offloading its Saab brand to luxury sportscar maker Koenigsegg.

Germany wants GM answer on Opel

Photo
-

OPEL-RHJ/Germany’s Economy Minister Karl-Theodor zu Guttenberg is boldly telling the German public that he expects a “fundamental decision” from the board of General Motors on the future of Opel next week.

He goes further, saying in a television interview that with offers from Canadian car parts manufacturer Magna and Belgian-based investor RHJ International on the table, it is tme for GM to “give in”.

RHJ plays cool hand in Opel bidding

Photo
-

GERMANY/RHJ International is playing a canny hand in the political poker match that is the sale of GM’s Opel. The Belgian financial investment house is keeping itself in the game by steadily upping the stakes, increasing the pressure on Berlin to take its bid seriously.

While the German government has so far thrown its considerable backing behind a rival offer for Opel spearheaded by Canadian car parts maker Magna, it has yet to force GM into a deal.

Why the carmaker in front is cutting back

-

Good news: global car capacity is being cut by 700,000 vehicles. Bad news: the company doing the cutting is the world’s most efficient manufacturer, Toyota.

Across the world, governments are pledging money to keep local plants open, mostly plants which have no long-term future, and which are far less efficient than the production line in Japan that Toyota is closing.

Germany should call GM’s bluff

Photo
-

Recently bankrupted companies seeking billions in taxpayer handouts do not generally have the strongest hand at the negotiating table. Yet General Motors seems determined to drive a hard bargain over the bailout of Opel, its European car arm.

After months of tortured negotiations with the German authorities, GM is now threatening to reverse away from the deal. However, it appears to have few alternatives.

Driving an Opel round in circles

Photo
-

Opel sign (Reuters photo)True to form, GM’s negotiator on the sale of Opel has poured cold water on expectations of a slam-dunk deal for Canadian car parts group Magna and its Russian backers.

John Smith (no relation, but I’m impressed by his negotiating) maintains in his blog that GM will compare the latest Magna offer with the proposal it has on the table from Belgium-based financial investor RHJ International.

Driving a hard bargain on GM’s Opel

Photo
-

OPEL-RHJ/John Smith, General Motors’ chief negotiator on the sale of Opel, deserves a medal. But he certainly won’t be getting one from German Chancellor Angela Merkel.

Magna says it has reached an agreement in principle to buy a controlling stake in GM’s European unit. However, GM says it is going to think about the revised offer from the Canadian auto parts maker. It wants more details of the government financing package on offer before it can make up its mind.

GM negotiator slams Opel bidder’s Russian connection

-

The GM blogger is at it again. John Smith, General Motors’ group vice-president and chief negotiator for the sale of its stake in Opel/Vauxhall, lays into the bid by Canadian-Austrian car parts maker Magna – especially the Russian Connection – in his latest update on the state of the talks.

He also pours cold water on happy talk from German politicians of an early decision in favour of Magna, backed by the German authorities, rather than rival Belgium-based financial investor RHJ International, which clearly still has GM’s preference.

GM and Germany in Opel chicken run

Photo
-

USA   By Alexander Smith and Paul Taylor

General Motors and the German government are playing out the Chicken Run scene from the 1950s James Dean classic film “Rebel Without a Cause”.
    Neither has leapt from their car yet, but there are growing signals from Germany that GM has its hand on the door handle and is preparing to drop its preference for financial investor RHJ in favour of handing control of Opel to Canadian auto parts maker Magna.
    GM has so far been in no hurry — although the U.S. car group has been doing its best to keep up appearances with a statement following this week’s board meeting saying it hoped to make a recommendation to the Opel Trust Board “shortly”. But German pressure has been rising as a Sept. 27 general election approaches.
    Germany’s eagerness to seal a deal with Magna — which has teamed up with Russian bidding partner Sberbank and automaker GAZ — is palpable.
    Berlin is ready to get its cheque book out to provide state aid for a deal with Magna. But has made clear this would be reconsidered if GM opted for Belgian-based RHJ, which Chancellor Angela Merkel’s government fears would cut more jobs. RHJ would be an unpopular choice in Germany, where a leading politician famously branded private equity buyers “locusts”.
    Berlin wants a deal closed in September and has set up an Opel Task Force to oil the wheels. Yet Opel workers are concerned that GM has been playing for time so that a decision is delayed until after the election.
    They fear that stalling until after polling day would make it easier for GM to put Opel through insolvency proceedings and shed some of its factories and staff at a lower cost.
    For Merkel, a deal on Opel’s future now would deprive her Social Democratic junior partners and rivals, who back Magna, of a potentially damaging campaign issue (“Merkel dithers while Opel burns”). But while it may yield short-term benefits, Berlin’s rush to hand Opel to Magna could yet backfire.
    GM’s chief negotiator John Smith has been vocal in his criticism of Magna’s bid, specifically citing concerns about the use of GM patents and Russian expansion plans.
    Magna’s Kremlin-backed partners operate in an opaque business environment where foreign players can suddenly lose control of a joint venture or face tax or regulatory obstacles.
    It may well be GM that blinks in the run-in with Berlin over Opel, but Merkel shouldn’t forget that whoever bails out first, the Chicken Run inevitably ends in a car wreck.

  •