DealZone

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.

Merkel said that GM’s recommendation — which would see
Magna’s Brussels-listed rival bidder RHJ International losing
out in the battle that has dragged on for months — is going to
be tied to conditions.

Although she said that those conditions would be manageable and
negotiable, doubts remain about whether this will be the new
beginning the company is hoping for.

Deals du Jour

Bharti Airtel will not sweeten its offer for MTN now that exclusive talks between the two have been extended. Instead, the talks are about administrative issues, permissions and a scheme of arrangements, Bharti Chairman Sunil Mittal told the Economic Times. And the fate of Opel hangs in the balance, with General Motors poised to pick a buyer. Its board will address the topic later on Friday, sources told us.

For these and other stories on deals, click here. And for an overview of what other media are saying, have a look at our daily Market Chatter.

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.

Deals du Jour

New European regulations made headlines on Tuesday as the former chief executive of Man Group hit out at proposed changes to hedge fund rules and the first details of new European bank regulations emerged.

Other stories to make the newspapers include:

* Bondholders to Northern Rock, the UK bank rescued by the state, are being repaid ahead of the British government due to a contract breach in 2008, the Guardian reported.

* London Residential Opportunities, a new residential property fund, is looking to raise 50 million pounds ($81.16 million) in equity ahead of floating on the London Stock Exchange later this year, according to the Daily Telegraph.

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.

When life gives you lemons, make limoncello

FRANCEIt may be a raucous bit of speculation gone awry, but reports in Italy that Fiat is angling to pick up General Motors’ Opel operations in Europe if the Chrysler deal falls through are too good to dismiss out of hand.

The denial from Fiat’s Chairman, Luca Cordero de Montezemolo, left a little room for intrigue in its dramatic flair. “They’ve written about it in the newspapers? No, no,” he told reporters. Fiat shares raced higher in relief. “Opel is linked to GM and Fiat has already got out of that,” said a Milan dealer, referring to a previous partnership. “Plus, it (Opel) is a clunker. Heaven forbid!”

Meanwhile, over at Chrysler, Chief Executive Bob Nardelli has been telling it like it will be. In an internal memo to staff, he said the company would cede control of its board, and ultimately senior leadership, if it completes the planned Fiat alliance. Given the Fiat deal is for only a fifth of Chrysler initially, rising eventually to 35 percent, that might seem odd. Then again, it’s the U.S. auto sector we’re talking about.