Saturday, August 22, 2009

GM board refuses to accept Canada's Magna as Opel winner

General Motors Friday postponed its decision on whether Canada's Magna International was the winning bidder for its Opel brand.

Magna, which is the world's third largest part maker, and the Savings Bank of the Russian Federation (called Sberbank), had jointly submitted a bid in July to acquire a 55 percent stake in the troubled General Motors' Opel.

Brussels-based financial investor RHJ International is the rival bidder. Two other bidders - Italy's Fiat and China's Beijing Automotive - opted out of the fray.

Opel is on the block as the ailing General Motors, which has received $50 billion bailout from US and Canadian governments, undertakes massive restructuring plans.

At their meeting Friday, GM's board of directors failed to come to a decision whether to accept the winning bid by the Canadian auto company and the Russian bank.

"The GM Board of Directors met today to discuss options for Opel. No decision was taken,'' a statement by the auto giant said after the meeting.

The German government has given its financial backing for the joint bid by Magna and the Russian bank.

But reports said GM's new appointed board of directors wants to know from the German government about financial backing for a rival bid by RHJ International.

Magna and Sberbank have offered $775 million to acquire a 55 percent stake in Opel and its UK unit Vauxhall. GM will retain 35 percent, and Opel employees acquire 10 percent under the deal.

But GM chief negotiator John Smith reportedly has reservations about Magna's offer because it will give its Russian partner access to GM intellectual property and control over some of its Chevrolet operations in Russia.

Magna's consortium with the Russian bank has the backing of the US, Canadian and German governments because of the emerging middle class in Russia which could fuel Opel's long-term recovery.

Being the majority stake holders in GM currently, the US and Canadian governments also have a big say in the bidding process.

The German government is also a big player as it negotiated and underwrote a deal to transfer Opel assets to a new company before the GM bankruptcy.
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