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.

Norway's $420 billion oil fund is rattling the cage of some of the foreign companies in which it has invested. As a shareholder it deserves praise for putting its head above the parapet. But as a sovereign wealth fund it is treading a fine line.

Norges Bank Investment Management (NBIM) has been stung into action by a combination of domestic political pressure to account for its investments and heavy losses on some parts of its extensive external investment portfolio.

NBIM has publicly chastised Volkswagen for its plans to take over Porsche assets as part of a cosy merger between the two German carmakers. A detailed letter to VW Chairman Ferdinand Piech, published in full on its website, doesn't mince words.

The fund's list of gripes is pretty long, ranging from conflicts of interests, a lack of transparency, questionable financial and strategic logic for the deal to concerns about the treatment of minority shareholders.

NBIM's intervention may well be too late to have any effect on the outcome of the planned tie-up. Only legal action by the fund, which had a 0.35 percent stake in VW at the end of 2008, could prevent the deal.

Nevertheless, the VW letter goes further than NBIM has before in openly criticising one of the companies in its extensive portfolio of 8,000 equity investments. This is unlikely to be a one-off, as NBIM is attempting to raise its profile.

At a presentation in London last week it laid out the tools it has at its disposal for achieving its goals. These include dialogue and engagement, contact with regulators, proxy voting, shareholder proposals and legal action.

NBIM has used this to good effect in the case of Constellation Energy  where it managed to block a unit of Warren Buffett's Berkshire Hathaway from taking over the energy group by successfully postponing a shareholder meeting. And it is seeking a change in bylaws at four U.S. companies where it is demanding the appointment of an independent chairman.

A similar tactic at Sara Lee Corp resulted in a change to the U.S. consumer goods and food group's rules. On one level, NBIM should be applauded. Its actions are precisely the kind that large institutions should be taking to ensure the companies they own are governed properly. This is a duty that many shareholders failed to perform in the past.

In the U.S. activist investors such as Calpers -- the country's biggest public pension fund -- have been doing this for years.

However, NBIM's position is complicated because it is the arm of a sovereign government. Agitating for change at foreign companies leaves it open to accusations that it is interfering inappropriately in the affairs of other countries. That charge has mostly been levelled at sovereign wealth funds (SWFs) from the Middle East and Asia that have taken high-profile stakes in Western companies.

NBIM, which is far more transparent than most other SWFs and based in a neutral Nordic country, has a more credible claim to be a dispassionate investor rather than a tool of Norwegian foreign policy. Nevertheless, it should not be surprised if its activism is met with a backlash.

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.

Walker is also stressing that Magna is not looking to compete with its clients but is simply aiming to get a good return on its investment in Opel, reiterating that Magna will remain a parts company.

There seems little doubt that Magna can manage potential conflicts, after all it already builds cars for BMW, Chrysler and Mercedes as well as making parts for Toyota, Ford and VW.

But to say Magna won't be competing with other carmakers once it starts building Opel cars is stretching the point. Why else would you buy Opel if it wasn't to take market share from VW and others?

Kraft’s bid for UK confectionary company Cadbury continues to generate headlines. And given the personalities involved, this should not be a surprise. Some of London’s top rainmakers are set to square up against a superstar of the 1980s merger era, Reuters’ Victoria Howley notes.

And here’s a round-up of deal-related stories from Thursday’s press:

* Volkswagen is considering overhauling its trucks business in a move that could herald a tie-up with German truckmaking and engineering group MAN AG, the Financial Times said. Reuters story here.

* Twitter is closing a round of funding that will value the company known for its 140-character, stream-of-consciousness blogs at $1 billion, technology news site TechCrunch said.

* British Airways is interested in rival UK airline bmi and has spoken with bmi’s German owner Lufthansa, BA’s chief executive told the London Evening Standard.

* Steel-to-property conglomerate CITIC Pacific Ltd aims to list in China, joining other Hong Kong-listed top Chinese firms that would like to list in their home market, media reports said.

For the latest Reuters deals news, click here.

    Rexam is delivering a nasty surprise to its shareholders, but the logic of its proposed rights issue is hard to fault.
    If trading turns out to be as bad as the board expects, then the penalty payments for refinancing its existing debt will far outweigh the cost and dilution of the issue.
    Broker Oriel Securities reckons the cost to Rexam if it loses its investment grade rating will be an extra 8 to 12 million pounds a year in interest payments.
    Businesses everywhere are rediscovering the joys of equity, as the way to stave off the dreaded downgrade. So far this year, shareholders have put up $119 billion, according to Thomson Reuters data, with $28 billion more due.
    Even cash-rich carmaker Volkswagen is reported to be considering issuing shares to bolster cash reserves and pre-empt any ratings downgrade relating to its merger with Porsche. Spanish utility Iberdrola and French construction groups Lafarge and Saint Gobain all took similar steps to bolster their ratings.
    Unfortunately, credit ratings agencies are so jumpy about regulators and the risks of legal action by investors that companies can't always bank on such moves working.
    Saint Gobain launched a rights issue, but still S&P cut it to BBB from BBB+. Lafarge did worse. Fitch not only cut its rating to BBB-, it added a "negative outlook".
    One reason ratings have increased in importance is that as banks have turned off the taps, companies have turned to the bond markets, allowing the agencies like Moody's Corp and McGraw-Hill's S&P to cash in.
    Experience has taught them caution, however, and the number of issues downgraded from investment grade to junk is on the rise. The threat of this -- with the higher cost of borrowing and reduced market access it brings -- is a powerful incentive to go to the shareholders. S&P has identified 75 issuers -- with $255 billion of debt -- in danger of losing their coveted investment grade.
    The unhappy experience of Rexam shareholders is likely to repeated many times as the debt crisis unwinds, but at least it's better than losing control of the business to its lenders.

Porsche's chief executive Wendelin Wiedeking may have been persuaded to leave in order to ease a merger with Volkswagen, but there are still major hurdles to overcome before the sports car maker finally emerges from the pits.

Wiedeking is paying the price for his disastrous plan to take over the far larger carmaker, which left Porsche with a majority stake in VW but saddled with debts of 10 billion euros ($14 billion). His departure marks a crucial turning point in a bitter power struggle between VW Chairman Ferdinand Piech and his cousin Wolfgang Porsche, chairman of the family firm.

    Wiedeking's exit ultimately paves the way for Piech to
install his own lieutenant to run the sports car maker instead
of Wolfgang Porsche's golden boy Wiedeking, who brought it back
from the brink of bankruptcy in 1992.

    But before that happens, the two companies still need to
agree on a structure which will allow them to make Porsche's
sports car unit VW's 10th brand. A merger between the two
companies rather than VW buying the Porsche sports car brand
from the Porsche family holding company is being touted as the
way forward. But although the various parts are gradually being
assembled, a deal could still be some way off.

    As to be expected in this family feud, mixed messages from
the Porsche and VW camps continue. The precise role of Qatar is
still unclear, some insiders are insisting Porsche can go it
alone with a financial boost from Qatar, while VW executives are
confidently predicting  that Porsche will be absorbed into the
larger company.

    Lower Saxony premier Christian Wulff says the German state
will retain its 20 percent stake in VW, with Qatar to take a 17
percent stake -- this would roughly fit with the Qataris taking
Porsche's VW options off its hands. But the crucial question of
how much the Porsche and Piech families would own of a combined
VW/Porsche has yet to be nailed down.

    VW Chief Executive Martin Winterkorn -- Piech's loyal
lieutenant -- says a decision on Qatar taking a stake will be
taken on August 13 by the VW supervisory board. Presumably the
Qataris will want a better idea by then of who they will be
sharing the company with.

    Piech -- grandson of Porsche founder and VW Beetle designer
Ferdinand Porsche -- has made it clear that he wants control of
the Porsche marque and Wiedeking's departure speaks volumes
about the balance of power between Piech and his cousin.

    Sacrificing Wiederking and bringing the Qataris on board may
not be enough to keep Wolfgang in the Stuttgart office once
occupied by Ferdinand Porsche. Piech clearly wants his name on
the door. Given his track record, you'd have to put your money
on him succeeding.

Volkswagen has called off a round of merger talks with Porsche, a source close to VW Chairman Ferdinand Piech said, adding talks would not resume until Porsche’s financial situation was clear. Porsche preferred shares hit the skids as fears that the financial engineering needed to pull off the deal may be beyond even German know-how.

Despite a healthy sports car business that the holding company says still earns enough to make interest payments on 9 billion euros ($12.19 billion) in net debt, the listed parent of Porsche is reported to be sounding out German state bank KfW about a 1 billion euro loan. Porsche declined direct comment on the report, saying only: “We do not name the banks with whom we negotiate.”

The families that control Porsche have a 51 percent stake in VW and they would like to drive that to controlling interest of 45-55 percent in the combined entity. Analysts have gone to the drawing boards and been able to figure out how Porsche, a 6.8 billion euro company, swallows VW, a 70.3 billion euro company. Accounting for preferred shares and other market inefficiencies, they calculate VW’s actual market cap at as little as 25 billion euros; on a comparable basis, Porsche holds a 14.1 billion euro equity stake.

A little harder to figure may be the politics. The state of Lower Saxony holds a potentially deal-blocking stake in VW, and there’s a bit of bad blood sloshing about in there. So even if VW becomes more affordable for Porsche, its ability to jump-start the deal could still need more German engineering.

Other Deals News:
* A Grupo Mexico SAB de CV unit formalized its $1.55 billion offer for bankrupt U.S. copper miner Asarco LLC by filing its own proposal for Asarco’s reorganization in a Texas court.

* China’s top economic body has approved state-owned Minmetals’ agreed $850 million deal to buy debt-laden Australian miner OZ Minerals Ltd, bringing Minmetals a step closer to completing the transaction.

* Japan’s Daiwa Securities SMBC said that it would buy a financial advisory unit of Britain’s Close Brothers Group, as Japanese investment banks rush to sign cross-border deals.

AIG plans to float its Asian crown jewel, Volkswagen halts talks with Porsche, Nomura hires for a massive push in U.S. equities, and more. Here are the latest deal-related stories:

AIG to launch IPO for Asia crown jewel

Volkswagen halts tie-up talks with Porsche

Nomura hires for massive U.S. equity push

Cubs’ offer won’t be voted on next week: sources

Babcock & Brown infrastructure fund gets acquired

China pension fund plans foreign PE deals: sources

China government OKs Minmetals’ OZ Minerals deal

Daiwa SMBC to buy unit of Britain’s Close Brothers

Whitehaven says to drop merger deal with Gloucester

Metro to present Karstadt deal outline: sources

And in Europe’s morning papers:

* Hedge fund manager Noam Gottesman, co-chief executive of GLG Partners Inc (GLG.N), plans to move to New York from London to build up the fund’s U.S. assets, the Daily Telegraph said.

* Alan Miller, former fund manager at New Star, plans to launch two new funds in a joint venture with Alexander Spencer Churchill, the Daily Telegraph said.

* Britain’s Financial Services Authority is investigating potential insider dealing in shares of pub companies Punch Taverns (PUB.L) and Enterprise Inns (ETI.L), the Daily Telegraph reported. Reuters story here.

* Societe Generale (SOGN.PA) CEO Frederic Oudea has said that further writedowns are possible at the bank, depending on market conditions, Le Parisien newspaper reported. Reuters story here.

Who in the world doesn’t believe in supporting the auto business? As the U.S. Treasury contemplates the extent to which it will pump funds into the Detroit Three, European leaders are revving up measures to keep their car companies chugging along.

French President Nicolas Sarkozy said France would consider making consumer auto loans more attractive as a way to help car makers hit by the global credit crunch and slowing economy. As if his country were plagued with a reckless, cut-throat sort of capitalism, the French president declared: “We cannot be the only country in the world that does not support our builders and manufacturers. We have to help industrial infrastructure.” He’s already offered 1,000 euros to every driver who trades in an old vehicle for a less-polluting one, so softening up auto loans would seem to be right up a Parisian alley.

In Italy, Fiat’s admission last week that its car business needs a partner to survive is seen as a way to put pressure on the Italian government for a solution. While media reports cite France’s PSA Peugeot-Citroen and Germany’s BMW as potential partners, industry watchers do not see a deal any time soon. Volkswagen says its finance arm has no capital problems, but is applying for state loan guarantees nonetheless. Sweden and Canada wasted no time pledging support for their auto sectors.

Much like any driver who has found himself staring dumbfounded at a mechanic’s repair bill, governments may be grumpy, but there is no way they won’t pay up.

Deals of the day:

* Suzlon Energy, the world’s fifth-largest wind turbine maker, said it has agreed with Portugal’s Martifer to revise the payment schedule to increase its stake in Germany’s REpower.

* Unite Group, Britain’s largest provider of student housing, said it has completed a sale of assets to the Unite UK Student Accommodation Fund for 171.3 million pounds ($262 million) in cash.

* Citigroup will sell its Japanese trust bank to a unit of Mitsubishi UFJ Financial Group for around $276 million, as the struggling U.S. bank looks to sell assets worldwide.

* China’s state-run energy giant Sinopec could acquire Russian mid-sized oil firm Urals Energy for $130 million, a Russian newspaper reported.

* Telefonica and Vivendi are about to close an agreement to buy Prisa’s pay-TV platform Digital+ for 2.3 million euros ($3.1 million), Spanish radio Intereconomia reported.

Fresh from having announced the end of its leasing programs, Chrysler Financial’s credit line is shrinking. The 20 percent cut in its credit facilities to $24 billion makes plenty of sense, given their downsizing, and on Friday it said its lenders were happy with the move to drop leasing. But The Wall Street Journal says Chrysler couldn’t actually get the whole $30 billion. It also says the automaker is paying a far more chunky 1.1 to 2.25 percentage points over Libor on different parts of the funding, from 0.3 to 0.5 percentage point on its borrowings a year ago.

Labor issues are a whole lot more dangerous to a deal in Germany than most other Western economies. So when Volkswagen’s senior labor leader says talks to agree on workers’ rights in Porsche’s new holding company are in danger of collapse, it’s probably time to check the engine. Responding to accusations from his Porsche counterpart that VW labor was blocking a deal, Bernd Osterloh said Zuffenhausen-based Porsche aimed to create a two-class system in which 12,000 Porsche employees outranked VW’s massive workforce. “If the 360,000 men and women working in the Volkswagen Group were of the opinion that a labor contract has to be terminated, Porsche representatives in the holding’s works council could then prevent this, according to the plans in Zuffenhausen,” he said in comments sent to Reuters.

Other deals of the day:

* Australia’s biggest port and rail operator, Asciano, rejected an unsolicited private equity bid worth around A$2.9 billion ($2.7 billion), saying the offer undervalued its business.

* Dutch food group Nutreco said it bought premix and specialty food company Biofaktory for about 10 million euros ($15.77 million).

* HSBC said it was ready to submit an updated application to South Korean authorities on its bid for Korea Exchange Bank, while a regulatory official said HSBC had been in negotiations to cut the purchase price.

* Russia-focused oil company Imperial Energy said it has received another approach for a possible cash offer for the company.