The deal to sell Opel is officially off. General Motors announced today it will keep its German subsidiary.
Back in September GM announced it would sell a 55-percent stake in Opel/Vauxhall to the consortium of the Canadian parts supplier Magna and the Russian bank Sberbank (representing the Russian automaker GAZ). Opel employees would have gotten a 10-percent stake and GM would have held onto 35 percent.
But the deal was delayed when the European Union expressed concern that it violated EU law: The German government had promised $6.6 billion in aid to Opel, but only if GM sold its subsidiary to Magna/Sberbank (which were thought to be most amenable to preserving German union jobs). This essentially made other bidders, among them RHJ International, the Belgian affiliate of private equity firm Ripplewood Holdings, less attractive. European press reports indicate that Germany subsequently relented and said it would provide the same aid package to other bidders.
It's not yet clear exactly what role this issue played in today's decision, thought Reuters reports that GM's board met immediately after the EU pressed GM officials to confirm that the company still would have chosen Magna/Sberbank had it known that Germany would have provided aid to any of the bidding companies.
Of course, there's nothing about this matter in GM's press release, in which Fritz Henderson states, "While strained, the business environment in Europe has improved. At the same time, GM's overall financial health and stability have improved significantly over the past few months, giving us confidence that the European business can be successfully restructured."
The release also indicates that GM estimates restructuring costs for Opel at 3 billion euros ($4.4 billion) --"significantly lower than all bids submitted as part of the investor solicitation."
German Chancellor Angela Merkel is in Washington, DC, this week, so it will be interesting to see if she weighs in on this announcement. The sale of Opel was a hot-button issue during her recent reelection campaign.
Reuters
Categories: Auto Industry,General Motors,Opel