Saturday, May 30, 2009

Germany OKs Magna bid to acquire GM's Opel

Germany OKs Magna bid to acquire GM's OpelAn employee of General Motors' German unit Opel works on a Corsa at the Opel plant in the eastern German town of Eisenach earlier this month. (Tobias Schwarz/Reuters)

The German government has approved a plan for a consortium bid led by Canadian-based auto parts company Magna International to acquire GM's Opel unit, the country's finance minister said Friday night.

Peer Steinbrueck said the agreement, which would see Opel put under the care of a trustee, was reached early Saturday.

Germany OKs Magna bid to acquire GM's OpelMagna International Inc. chairman Frank Stronach talks to reporters in Berlin on Thursday. (Franka Bruns/Associated Press/Canadian Press)

The consortium bid led by Aurora, Ont.-based Magna International, includes Russian lender Sberbank.

The German government will provide a $2.1-billion US bridge loan which will be available immediately.

According to the New York Times, under the terms of the deal, GM would retain a 35 per cent stake in the new company, with Sberbank taking 35 per cent, Magna holding 20 and Opel’s employees controlling the remaining 10 per cent.

The consortium plans to work together with Russian car maker Gaz to produce more than a million vehicles in Russia and Eastern Europe.

As part of the deal, all four factories in Germany will remain in operation, although Magna has said previously it will need to shed about 2,500 jobs.

The German government has been seeking an agreement that would shield Opel from a looming bankruptcy filing by General Motors in the U.S. and extensive restructuring. Opel employs 25,000 people in Germany, nearly half of GM Europe's workforce.

GM is widely expected to file for bankruptcy protection in the U.S. on Monday.

Siegfried Wolf, a co-CEO of Magna, said he expected the agreements with GM would be signed in five weeks, but insisted that the deal struck early Saturday would prevent Opel from being touched by whatever happens to GM.

"We really have taken the risk that was necessary to show a commitment, and we are committed, otherwise we wouldn't have done this deal," Wolf said.

With files from The Associated Press