GM in talks that may leave Magna alone at the altar
ROME–As General Motors and auto-parts giant Magna International struggle to conclude a deal for Opel, GM is talking with other potential buyers in a bid to win better terms, according to the officials involved in the negotiations.
While Aurora-based Magna remains the favoured buyer of the German government, GM has pressed for the right to regain control of Opel in several years, according to the officials, but Magna has so far refused to budge.
Under the terms of a preliminary deal brokered by Berlin before GM’s bankruptcy filing on June 1, GM and Sberbank, a Russian lender controlled by the Kremlin, would each hold 35 per cent of Opel, with Magna owning 20 per cent and Opel’s workers controlling the remaining 10 per cent.
Yesterday, Siegfried Wolf, a Magna chief executive, expressed confidence that a deal would be reached and said that he "wants to come to an agreement by July 15," Associated Press reported.
Initially, Fiat had been favoured as the probable buyer, but Magna edged out the Italian automaker because of German union and government fears that a Fiat deal might mean significant job cuts in Germany. Many analysts argued that the Fiat deal made more commercial sense because consolidation was needed in an industry suffering from overcapacity amid the worst sales slump in decades.
Fiat CEO Sergio Marchionne has said that the Italian company will not raise its bid but that it remains interested if the talks falter.
While Fiat remains in the background, GM has quietly begun talking with RHJ International, a Brussels-listed industrial holding company that owns auto-parts businesses in Japan and Germany, as well as Beijing Automotive Industry Holding same day payday loans.
Beijing Automotive, owned by the Beijing city government, has been the largely silent local partner for a series of joint ventures with multinational automakers, while showing little interest in developing its own cars. But after recent management changes, it has begun to show an interest in raising its profile.
"Their new leaders are very ambitious," said Yale Zhang, the director of China vehicle forecasts at CSM Worldwide, an automotive consulting firm. "They really want to achieve a bigger role.”
Still, officials doubt that the Chinese company is prepared to take on such a complicated international transaction. Government officials say they consider RHJ the most likely fallback plan if the Magna-Sberbank deal should falter.
By talking with other interested parties, General Motors improves its leverage over Magna and Sberbank, even as the Detroit giant moves through bankruptcy. What is more, the talks provide GM with the ability to quickly move on to a new deal if the Magna talks should founder.
The German government, which is providing Opel with 1.5 billion euros in bridge financing as well as 3 billion euros in loan guarantees, remains the kingmaker.
A spokeswoman for Sberbank declined to comment, while Arnaud Denis, a spokesman in Brussels for RHJ International, said he could neither confirm nor deny his company’s interest in Opel.
Filed under: money by TheDoor