By DPA,
Berlin : Giant US carmaker General Motors Co. (GM) plans to sell off a majority stake in its European offshoot Opel to a consortium lead by the Canadian-Austrian auto parts group Magna International, German Chancellor Angela Merkel announced Thursday.
Merkel’s announcement at a press conference in Berlin came after the company held a two-day board meeting in Detroit and follows months of uncertainty surrounding the fate of Opel, which has about half of its 50,000 European workforce in Germany.
The German government has backed the Magna-led bid for a majority stake in Opel and said it would provide 4.5 billion euros ($6.5 billion) in state-backed guarantees to help Magna restructure the GM European subsidiary.
Welcoming the GM decision, Merkel said it represented “a new beginning for Opel”, but she conceded it will not be an easy way for Opel.
The Magna consortium also includes the state-owned Russian Sberbank and Russian carmaker Gaz.
The GM board’s decision comes at a critical time for Merkel, who is facing an election in less than three weeks. Opel is currently being propped up by a 1.5-billion-euro ($2.2-billion) bridging loan from Berlin.
Negotiations over the Opel sale are expected to continue. Key details of the deal have still not been unveiled, including possible job cuts at the company’s European plants as well as the exact size of the shareholdings in what has been called the New Opel.
Throughout the already protracted negotiations, GM indicated that it wanted to retain at least a minority stake in Opel, which is based in the west German town of Russelsheim. It is also understood to have imposed conditions on the sale to Magna.
After a two-day meeting in Detroit, the GM board dispatched company Vice President John Smith to Berlin to tell both the Opel workers and the German government of its decision.
GM’s European subsidiary includes Opel’s operations in Poland, Spain and Belgium as well as Britain’s Vauxhall brand.
The decision to select Magna follows mounting speculation in recent weeks that GM wanted to retain control or a dominant role in Opel because the US carmaker was reluctant to give the Russian interests in the Magna bid access its technology.
But in line with calculations made by Opel’s German trade unions, the international financial advisory group KPMG told the GM board in a report it would need up to $6.1 billion to retain its European subsidiary.
However, the final decision on the future ownership structure of Opel rests with a German government-backed trust, which currently oversees the day-to-day affairs of the auto group.
The trust would not be consulted if GM opted to retain control of the Opel.
Plunging car sales resulted in GM launching earlier this year a major restructuring of its global operations, including selling off of a majority stake in Opel.
But since then, the carmaker has emerged from bankruptcy and a new GM board has been appointed. Also, there are signs the economic crisis has abated for the global car industry and the world economy in general.