• Germany's news in English

GM may hang on to Opel

AFP · 25 Aug 2009, 08:14

Published: 25 Aug 2009 08:14 GMT+02:00

Facebook Twitter Google+ reddit

GM, which emerged from bankruptcy protection last month with the US government owning a majority stake, is trying to develop a $4.3 billion financing plan that would allow it to keep control of Opel, The Wall Street Journal reported late Monday.

That amount would compete with the €4.5 billion the German government is offering in public financing to support a takeover by Canadian auto parts maker Magna and its bid partner, Russian state-owned bank Sberbank.

It also is roughly in line with the €3.8 billion in public financing offered by rival bidder, Brussels-based investment group RHJ International.

Contacted by AFP, GM declined to comment on The Wall Street Journal report.

If the US automaker changes strategic tack, it would short-circuit the massive rescue effort of Opel undertaken by the German government in the face of potential big job losses - about half of GM's 50,000 European employees work in Germany - ahead of September 27 elections in which Chancellor Angela Merkel is seeking a second term.

After having clearly expressed for months its desire to get rid of Opel and its British affiliate, Vauxhall, which form the core of the company's European operations, GM, once the world's largest automaker, struck a tentative agreement with Magna in May, days ahead of seeking bankruptcy protection.

But the potential deal has suffered tortuous setbacks, with GM and Berlin wanting to raise the bids, and a smaller GM emerging from bankruptcy-court reorganization in July under new leadership and stripped of assets.

The parties reached an impasse last weekend, after the GM board of directors discussed the options for Opel but did not proceed with the Magna offer, backed by Berlin, or that of RHJ.

While GM remained tight-lipped over the fate of Opel, German Chancellor Angela Merkel's government stepped up the pressure, calling on the US government, which owns more than 60 percent of GM, to push a resumption of negotiations with the automaker.

On Monday, the White House rebuffed German government pressure, saying President Barack Obama's "view is that decisions made about the day-to-day operations at General Motors should be made by the folks at General Motors."

"He never wanted to get into the auto business, and he's happy for them to make their decisions and get back on their feet," said White House deputy spokesman Bill Burton.

According to The Wall Street Journal, citing three sources involved in the matter, GM chief executive Fritz Henderson presented the options Friday to the company's newly formed board of directors in hopes of winning support for the Magna offer.

"The board turned down the Magna deal, these people said, raising questions about how such a sale would affect GM's strategy in Europe, and also voicing concern about specific details related to the German government's financing commitment," the newspaper said.

According to the sources, the management team was asked to rethink its options, and also to prepare more scenarios for consideration, including a plan to raise billions in new financing that would allow GM to keep Opel for itself.

Another option to be considered, "albeit remote," the Journal said, is the potential liquidation of the Opel business.

Story continues below…

Henderson "is supposed to have the plan done by the board's next regularly scheduled board meeting in early September," the newspaper said on its website.

German government spokesman Ulrich Wilhelm said Monday that Germany had received "no indications" to support media reports that GM was considering holding on to Opel.

Keeping Opel "would be in GM's long-term strategic interests," said Terrence Guay, a professor of international business at Pennsylvania State University.

"Giving up on the European market may, in 10 to 20 years, be viewed as a serious mistake" if GM intends to remain a global company, he said.

Facebook Twitter Google+ reddit

Your comments about this article

Today's headlines
Berlin Holocaust memorial could not be built now: creator
The Memorial to the Murdered Jews of Europe, in Berlin. Photo: DPA.

The architect of the Berlin Holocaust memorial has said that, if he tried to build the monument again today, it would not be possible due to rising xenophobia and anti-Semitism in Germany and the United States.

'Liberal' Germany stopping Europe's 'slide into barbarism'
Ian Kershaw. Photo: DPA

Europe is not slipping into the same dark tunnel of hate and nationalism that it did in the 1930s - mainly thanks to Germany - one of the continent's leading historians has said.

Eurowings strike to hit 40,000 passengers
Travelers impacted by the strike on Thursday wait at Cologne Bonn airport. Photo: DPA.

The day-long strike by a Eurowings cabin crew union is expected to impact some 40,000 passengers on Thursday as hundreds of flights have been cancelled.

Deutsche Bank reports surprise quarter billion profit
Photo: DPA

Troubled German lender Deutsche Bank reported Thursday a surprise €256-million profit in the third quarter, compared with a loss of more than six billion in the same period last year.

US 'warned Merkel' against Chinese takeover of tech firm
Aixtron HQ. Photo: DPA

The German government withdrew its approval for a Chinese firm to purchase Aixtron, which makes semiconductor equipment, after the US secret services raised security concerns, a German media report said Wednesday.

Long-vanished German car brand joins electric race
Photo: DPA

Cars bearing the stamp of once-defunct manufacturer Borgward will once again roll off an assembly line in north Germany from 2018, the firm said Wednesday.

Eurowings cabin crew union to strike all day Thursday
Photo: DPA.

UPDATE: A union representing cabin crews on Lufthansa's budget airline Eurowings has announced that strikes will last all day Thursday as ongoing contract negotiations continue to falter.

Hesse hopes to set example by building Iraqi orphanages
Refugee children in northern Iraq. Photo: DPA

The wealthy central German state of Hesse has set aside €1 million to build a school, family homes and an orphanage in northern Iraq, in an effort to help refugees there.

The Local List
10 German clichés that foreigners get very wrong
David Hasselhoff. Photo: DPA

Whether it be efficiency, humourlessness or a love of a certain Baywatch star, there are many cliches stuck in the heads of foreigners about Germany. But how true are they?

Fake Germanwings victim relative convicted in Cologne
A torn piece of metal at the crash site in 2015. Photo: DPA

A German court on Wednesday gave a woman a year's suspended jail sentence for posing as the cousin of a victim in last year's Germanwings plane crash and obtaining compensation offered by the airline.

10 German clichés that foreigners get very wrong
Sponsored Article
Last chance to vote absentee in the US elections
10 ways German completely messes up your English
Germany's 10 most weird and wonderful landmarks
10 things you never knew about socialist East Germany
How Germans fell in love with America's favourite squash
How I ditched London for Berlin and became a published author
12 clever German idioms that'll make you sound like a pro
23 fascinating facts you never knew about Berlin
9 unmissable events to check out in Germany this October
10 things you never knew about German reunification
10 things you're sure to notice after an Oktoberfest visit
Germany's 10 most Instagram-able places
15 pics that prove Germany is absolutely enchanting in autumn
10 German films you have to watch before you die
6 things about Munich that’ll stay with you forever
10 pieces of German slang you'll never learn in class
Ouch! Naked swimmer hospitalized after angler hooks his penis
Six reasons why Berlin is now known as 'the failed city'
15 tell-tale signs you’ll never quite master German
7 American habits that make Germans very, very uncomfortable
Story of a fugitive cow who outwitted police for weeks before capture
jobs available
Toytown Germany
Germany's English-speaking crowd