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GM to sell Opel to Magna with conditions: sources
2009-09-10
FRANKFURT/BERLIN (Reuters) - The board of General Motors has decided to sell its European arm Opel to Canadian auto parts group Magna, but has attached strings to the sale, sources familiar with the situation told Reuters. "It will be Magna, but under conditions," one source said on Thursday. A separate, coalition party source in Berlin said: "We won't know whether Magna can meet the conditions set by GM until after the German election," which takes place on September 27. GM Europe declined comment. Earlier, General Motors said after a two-day board meeting it had approved a course of action for Opel and would be communicating its recommendation within the next 24 hours. The trust supervising Opel announced that it would hold a news conference in Berlin at 4:15 p.m. (10:15 a.m. EDT) to announce a decision on a majority investor in Opel. GM's chief Opel negotiator John Smith and Fred Irwin, chairman of the Opel trust, will be at the news conference. The trust was set up in May to keep Opel from being swept into GM's bankruptcy and has the final say on who buys the company. It comprises two representatives each from GM and Germany, as well as an independent chairman who is supposed to act as an arbiter between the two sides. The decision is being closely watched in Germany, where Opel employs roughly half of its 50,000 European workers at four plants making everything from three-door Corsa subcompacts to Zafira vans. The carmaker has two factories that produce automobiles under the Vauxhall badge as well as major sites in Belgium, Poland and Spain. Andrea Rosemann, a 46-year-old Opel employee who works on chassis construction in the technology development department at Opel's headquarters in Ruesselsheim, burst into a smile on hearing Magna was set to clinch a deal. "I hope it's right that Magna got it. Everything we heard about RHJ sounded like they were a locust merely interested in turning a quick profit," she said. GERMAN ELECTION Chancellor Angela Merkel, fighting for re-election in this month's vote, had thrown her weight behind Canadian auto parts group Magna's bid for Opel, promising 4.5 billion euros ($6.6 billion) in government guarantees if GM opts for the Russian-backed offer. Berlin believes the Magna bid guarantees the brightest long-term future for Opel, which traces its roots in Germany back to the 19th century. But GM is believed to have had concerns about its ability to control its intellectual property and vehicle technology in the Russian partnership and some of its senior management had said a rival bid by Brussels-listed RHJ International would be easier to implement. Magna wants to use plant capacity at Opel by tapping into its expertise in contract manufacturing and building rival models for outside carmakers. It forecasts high growth rates, particularly in Russia, home of its consortium partners Sberbank and GAZ. Under their proposal, Magna and Sberbank would each own 27.5 percent of the company, while Opel employees would hold 10 percent and GM the remaining 35 percent. Some 10,000 European jobs would be cut, 25 percent of those in Germany. RHJ was planning to take a majority stake in Opel and shrink production to return the company to profit, a blueprint Berlin had refused to help finance. Under the RHJ plan, roughly the same number of jobs would be cut as under the Magna plan. (Reporting by Dave Graham in Berlin, Angelika Gruber and Christiaan Hetzner in Frankfurt, and Edward Tayler in Ruesselsheim; Writing by Noah Barkin; Editing by David Holmes) ($1=.6898 euros)
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