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.

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.

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.