DealZone

Opel, Magna in tentative deal

May 29, 2009

opel2Germany’s Opel might have a Canadian owner soon.

With its current owner, General Motors, facing a very-likely bankruptcy, Germany desperately wanted a new owner for Opel to save it from insolvency, save thousands of workers from unemployment and save the politicians from failing in re-elections.

After hours of talks with Italian automaker Fiat and Canadian auto parts supplier Magna International, GM has reached an agreement, in principle, to rescue the German unit.

The two sides have been trying to agree on a memorandum of understanding that would serve as the basis for bridge financing of 1.5 billion euros ($2.1 billion) as well as a trustee solution that would protect Opel from creditors in case GM files for Chapter 11.

A framework agreement has been reached, per sources, but the MOU has not been signed yet. Fiat, which wanted to create a global auto empire after buying a stake in Chrysler, doesn’t look like it’s going to get very far in that goal any time soon. With Magna in, Fiat is out. Stay tuned for the final details on the fate of Opel.

Comments
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Magna proved its determination and seriousness by offering to put money on the table for the bridge financing. The Fiat boss complained about the question, as if it was a grave insult, and showed that he wants Opel as a gift for Fiat, with no risk attached, and with the German government paying all costs. This is unacceptable. Mr. Marchionne seems to be a bit uninformed and behind the times. If he had read the news, for instance here at Reuters, he would have been aware that “no money down” deals are SO last year. Nice try, but no cigar!

Posted by Gray | Report as abusive
 

This deal looks like the best alternative, does it include the rest of GM Europe or only Opel Germany? They are quite worried in the Uk because a bankrupt Vauxhall would mean the loss of 5500 Uk jobs.

 

The NYT reports, it’s about Opel and Vauxhall. And Lord Mandelson had been in talks with both Fiat and Magna, and seems to be certain that Vauxhall will survive. So, no sweat!

However, bad news for the Swedes. Nobody mentioned Saab. That’s sad, it’s a brave little company with a long tradition…

Posted by Gray | Report as abusive
 

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