GERMANY: GM Board recommends Opel sale to Magna
- GM to sell 55% stake in New Opel to Magna/Sberbank
- Employees to hold 10% stake in New Opel
- Government supports financing through additional state guarantees
- Definitive agreements expected for signature 'in a few weeks'
GM has announced that it is planning to sell a 55% stake in New Opel to Magna/Sberbank.
GM said in a statement that its Board of Directors 'supports a bid from the consortium of Magna International Inc. and Sberbank to buy a majority stake in its European Opel/Vauxhall operations'.
The statement added that several key issues will be 'finalised over the next few weeks to secure the binding agreements, including the written support of the labour unions to support the deal with the necessary cost restructuring for viability and the finalization of a definitive financing package from the German government'.
The definitive agreements should be ready to sign within a few weeks, the statement continued, with closing to follow within the next few months.
Earlier today reports circulated widely that GM was seeking to retain control of its Opel/Vauxhall operations with conflicting signals apparently coming from sources close to GM's board meeting held this week.
The decision to sell to Magna is sure to cause some surprise after the protracted nature of negotiations that have lasted for months and appeared to be stalled over technology ownership concerns associated with the Magna bid.
The proposed majority stake sale decision must be approved by the Opel Trust, which is due to hold a press conference today.
The German government - facing a general election later this month - was a strong advocate of the Magna proposal which is seen as sympathetic to retaining jobs in Germany.
"I am very pleased about the decision that's been made and it is along the lines that the federal government has been advocating," German Chancellor Angela Merkel said today.
"But it's also along the lines that the employers and the employees of Opel wanted."
Under the deal, Magna/Sberbank will purchase a 55 percent stake in New Opel; GM will hold a 35 percent stake and employees will be provided a 10 percent stake.
"The hard work over the past two weeks to clarify open issues and resolve details in the German financial package brought GM and its Board of Directors to recommend Magna/Sberbank," said Fritz Henderson, GM President and CEO.
"We thank all parties involved in the intensive process of the last few months - especially the German government - for their continued support that enables this new venture. I'd also like to thank the Opel and Vauxhall customers for their continued loyalty. GM will continue to closely collaborate with Opel and Vauxhall to develop and produce more great cars, such as the new Insignia and the new Astra," Henderson added.
The agreement will keep Opel/Vauxhall a fully integrated part of GM's global product development organisation, allowing all parties to benefit from the exchange of technology and engineering resources.
GM said the new ownership structure constitutes a new lean, efficient and independent organisation for the Opel and Vauxhall brands. The current portfolio of Opel/Vauxhall cars and the models in the pipeline are a strong basis for future success, the company added.
Participating in GM's global technology development and purchasing organisations secures important economies of scale for Opel/Vauxhall and other GM brands. For example, vehicles that represent new propulsion technologies, such as the Ampera extended-range electric vehicle, can only be brought to market in a joint effort, GM noted.
"GM operates many joint ventures around the world and has proven in the past that this business model delivers the right balance of independence, innovation and synergies," said John Smith, GM Group Vice President Business Development.
"All parties will work hard to close the deal as soon as possible," he added.