DealZone

GM’s Opel Surprise

“You wonder if your chance will ever come or if you’re stuck in square one.”

When I heard about GM keeping its Opel unit, that line from a song by British band Coldplay came to my mind. After all those long nights of paltering on job cuts and money, GM was having a change of heart.

The sale of Opel to a group led by Canadian car parts maker Magna — announced in September — was widely considered a done deal. Turns out, it was less done than more. Citing improving business conditions and the strategic importance of Opel, GM decided it would be better to alienate the German government that provided it with a loan to sweeten the sale of the unit to Magna than to lose the business. GM said it would repay the rest of the 1.5 billion euro ($2.2 billion) bridge loan if Berlin requested. The loan helped save Opel from being sucked into GM’s dip into bankruptcy this year.

“This is a black day for Opel,” an employee, who declined to be named, said in front of the company’s headquarters in Ruesselsheim, near Frankfurt. German government officials were said to be seething, as were the Russians, who’s Sperbank had tied up with Magna to do the deal. But not all of Europe was angry. British unions welcomed the news. “It is fantastic news for the UK and right that General Motors does not break up its family and instead retains ownership of (Opel sister brand) Vauxhall,” said Tony Woodley, joint general secretary of the Unite union.

Analysts say big questions remain about what GM will do with Opel when consumer-friendly car scrapping schemes expire. At that point, will it be back to square one?

Magnum’s Opel

General Motors may soon get the long-delayed green light to sign over carmaker Opel to Canada’s Magna. EU antitrust regulators have no plans to block Magna’s acquisition of GM’s European arm, a European Commission spokesman said in Brussels, easing fears the transaction could run out of gas in debate over German state aid to the mostly German-staffed company.

Magna hopes to conclude the deal within weeks of signing a contract. That should be that, right? Well, hardly. For one thing, Spanish workers at Opel’s plant at Figueruelas have voted to strike in protest at cuts included in the Magna package. And European politicians say GM and the Opel Trust should have the option of reopening the bidding process.

But the jilted other bidder, RHJ, says it is no longer interested in doing a deal, so going back to the auction block is probably a nonstarter. And with European auto titan Volkswagen saying sales will likely stay stalled next year, the political will to get a deal done is about all Opel has going for it right now. The company is poised to run out of cash by mid-January.

from Commentaries:

Should Volkswagen demand a Magna Carta?

GERMANY/Magna International seems to be taking seriously threats from Volkswagen to pull its business following the Canadian car parts maker's Opel victory.

Magna's co-CEO Donald Walker is saying that after talking to them, most of his other customers are happy that the car parts group -- which along with Russian backer Sberbank is buying a 55 percent shareholding in GM's Opel -- is able to protect their technologies.

Apparently VW is still unconvinced, so Magna will "finalising the internal procedures" and will have more talks with the German carmaker.

Road to fortune or highway to hell?

GM-OPEL/That will ultimately be the question asked about what kind of a future the German carmaker Opel faces.

Parent General Motors said on Thursday that it indeed wanted
to sell a majority stake in the unit to Canadian auto parts
group Magna and Russia’s Sberbank, a decision long favoured by the German government under Chancellor Angela Merkel.

With about two weeks to go until a general election in
Europe’s biggest economy, this would clearly be a political
victory — but the question remains whether it will also be an
economic one.

from Commentaries:

Driving an Opel round in circles

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.

Yesterday was a pretty busy day in the media, with many outlets  reporting that Magna/Sberbank and General Motors had reached an agreement regarding Opel.  At the risk of repeating myself, that’s just not the case. (emphasis added)

Opel and shut case?

Just when the baroque machinations surrounding the sale of GM’s European unit seemed like they couldn’t get any murkier, one bidder has taken on the heroic initiative to announce it has won agreement with GM for a deal. Our interview with Siegfried Wolf, the Co-CEO of Canada’s Magna, had the ring of finality to it, but GM has already said it was in agreement with the other bidder, Belgian private equity firm RHJ. The German government is quiet for now, having already said it supports Magna.

According to Magna, GM management agreed in principle to sell it and Sperbank, its Russian partner, a 55 percent stake in Opel. Shortly after the interview ran, GM helped to keep the waters muddy, saying its board will discuss Opel options once it has a financing plan in hand that European governments will support. It did confirm that Magna and Sberbank had presented GM with a revised draft agreement, which it will review over the next few days. If nothing else, the interview appears to tip the balance a bit, but given all the bumps in the road this deal has hit, investors can be forgiven for wanting to wait for the official word.

Can GM get back into Opel?

RHJ International, a bidder for Opel, told a German newspaper it might consider selling Opel back to GM after it does its private equity triage on the European carmaker. “Let us be pragmatic. It won’t work without General Motors,” Leonhard Fischer, RHJ’s CEO, told Frankfurter Allgemeine Sonntagszeitung. It reported Fischer was explicitly not ruling out the option of selling Opel to GM after RHJ had completed its restructuring of the ailing carmaker.

As far as German Chancellor Angela Merkel is concerned, Canada’s Magna is the preferred partner for Opel. The GM Opel Works Council this morning is demanding greater say in the sale of the company. Specifically, it said GM should not be able to buy back a stake in the company. It also flexed a bit of muscle, saying if it doesn’t get a greater say over who ends up owning Opel, it won’t play ball on achieving structural cost savings.

GM to sell assets to “newco,” future of “oldco” still uncertain

gmA U.S. federal judge has authrorized the sale of General Motors’ most profitable assets to a “new GM,” backed by the government, in a move seen as crucial for the automaker to exit bankruptcy protection.

The decision by Judge Robert Gerber of the U.S. bankruptcy court in Manhattan came after three days of hearings to address the 850 objections to the restructuring plan. In his 95-page opinion, Judge Gerber wrote that the sale would “prevent the death of the patient on the operating table.”

Under the terms of the revised deal, G.M. would sell its best assets, including the Chevrolet, Cadillac, Buick and GMC brands, to a new company owned largely by the American and Canadian governments and a health care trust for the United Automobile Workers union.

No deal on Opel as GM needs more cash – again

opel1What’s surprising: Talks for General Motors Corp’s Opel failed to yield a deal.

What’s not-so-surprising: GM needs cash. Again.

Talks that ran all through Wednesday night to sell Opel to one of four final bidders narrowed the race to two but failed in sealing a deal. German ministers, emerging in the early hours of Thursday morning after more than 12 hours of talks, blamed GM and the U.S. Treasury for the failure.

Why? Because GM, the ministers say, shocked participants by announcing it needed 300 million euros ($415 million) more in short-term cash from the German government to  keep Opel operating.