General Motors today appeared to have bowed to strong German regional and federal political pressure as it ended months of speculation by announcing its board “supports” a bid from the Magna International consortium with Sberbank to buy a majority 55% stake in its European Opel/Vauxhall operations.

Under the deal, Magna/Sberbank will purchase a 55% stake in New Opel; GM will hold a 35% stake and employees will get a 10% slice.

Earlier, the wording of an Opel Trust invitation to a press conference and breaking media reports all appeared to confirm the Canada-Russian partnership’s success after there were signs GM was going to favour the rival private equity bid from RJH International or even hang on to Opel/Vauxhall and restructure the European unit itself, raising its own funds.

Opel’s trustees met earlier today in Berlin to review the transaction.

In a lat-minute flurry of media reports and speculation, Bloomberg TV said it had also been told by a regional government source that Magna had got the nod while the Canadian autoparts maker’s chief Frank Stronach had also indicated he expected a ‘yes’.

But the day began with speculation GM would this afternoon say it was keeping the European unit, after all.

GM said in an earlier statement only that its board had taken a decision on Opel after a two-day meeting. Britain’s Sky News, citing unnamed sources, at breakfast time reported GM had decided to keep the operation.

Sources told Reuters GM had dispatched chief Opel negotiator John Smith to Berlin to brief the trust supervising Opel and German government officials ahead of the news conference.

“General Motors’ board of directors approved a course of action for its Opel subsidiary and will be communicating its recommendation to the German government, other European governments, both bidders, employees and the Opel trust board over the next 24 hours,” GM said.

Sky said British business secretary Peter Mandelson cut short a visit to China to return to the UK for the announcement. The announcement was keenly awaited here in the UK because of the two Vauxhall plants, employing about 6,000 workers, one of which has an unsure future after 2012. GM workers Europe-wide now await details of changes the new majority owner will make, including expected plant closures.

The ‘keep’ option was the best option, Sky commentators were saying first thing this morning, as it was likely to lead to the lowest number of job cuts.

German chancellor Merkel, facing an election on 27 September, had consistently backed the Magna bid for with a promised EUR4.5bn (US$6.6 billion) in government guarantees.

“I am exceptionally happy about this decision, which is along the lines of what the government wanted,” she said after GM finally made its decision official.

The UK government said it would continue talking with Magna to ensure the best possible result for Vauxhall workers, according to business minister Pat McFadden.

McFadden said the UK government’s “objective throughout has been to get the best possible outcome for the Vauxhall workforce and the production plants in the UK.”

“We will now continue our discussions with Magna: they have told us of their commitment to continuing production at both Ellesmere Port and Luton,” he said.

He later told the BBC the government was ready to put money into Vauxhall but declined to discuss specifics, saying much detail was still to be worked out.

GM reportedly had been concerned at the likely transfer of technology to the Russians. But that was last night dismissed by Magna’s chief Frank Stronach.

“There are so many different joint ventures signed between car companies,” he told Bloomberg TV. “There’s joint venures with Korean car companies. And, if the Chinese want to copy something, no one can stop them. It’s not rocket technology which is transferred, it’s just simple car technologies.”

A plan GM drafted earlier this year reported by the Frankfurter Allgemeine Zeitung (FAZ) newspaper said GM could close its Belgian factory in Antwerp and two German plants in Eisenach and Bochum.

German finance minister Peer Steinbrueck said earlier this week GM would have to repay the EUR1.5bn loan for Opel and would get no more aid if it planned to close German factories.

“The 1.5bn bridging credit is a loan. And a loan is a loan. GM must pay back the 1.5bn under the conditions that we agreed on for Opel,” he said in Berlin.

According to AFP, the finance minister added that “there can definitely not be a second tranche of the bridging aid, the additional EUR3bn guarantee, if there are plans to close German plants.”

GM management had said the rival bid from Brussels-listed RHJ International, which Berlin was refusing to help finance, would be easier to implement.

Some elements within the GM board were also known to have favoured keeping Opel.

Labour, meanwhile, was firmly and consistently behind the Magna bid and had threatened protests in Eisenach later today if anything else was announced.

Reuters has reported early analyst reaction. Nordlb’s Frank Schwope said: “If true, this seems to be a political decision rather than an economic one. The most meaningful choice would have been a global company that produces several millions of cars (per year), such as GM or a Chinese producer. Magna is not a producer of cars in the classic sense and I could imagine that some other producers could be upset about the decision. As a consequence, Opel may lose some contracts.”

Nomura International’s Michael Tyndall: “This is an industry that is burdened with excess capacity and we’ve just passed through one of the best opportunities in over a decade to see real capacity taken out of the industry.

However, governments have got involved because it’s a politically sensitive sector and we’re coming through the other side of the downturn with the same number of companies, maybe more, and the same number of brands.”

Aleksej Wunrau at BHF Bank: “A decision to sell Opel to Magna makes sense in my view, simply because the German government will then likely make available further funding. However, it really depends on what GM’s conditions will be.”

Credit Suisse’s Stuart Pearson: “It’s not really a surprise. Despite some of the protestations and GM’s indications that they might want to keep the business, everyone still thought ultimately it would go to Magna. It’ll be interesting to see what Magna does with the business in terms of how fast it reduces Opel capacity.

This doesn’t really change the dynamics of the European marketplace that much. Opel is still there with the same facilities, and for a long time it will have the same products although longer term it’ll change as they grow into Russia.

In the long term I’m not sure what Magna brings in terms of car manufacturing expertise – it doesn’t basically. This is a huge challenge for them. It’s a long road back to profitability and it’s going to take a lot of cash and a lot of time.”