General Motors is pushing for assurances that it has a major voice in future product decisions.
Magna International Inc. and Savings Bank of the Russian Federation (“Sberbank”) have just confirmed that they have jointly submitted a revised offer to acquire a 55% interest in Adam Opel GmbH and Vauxhall that is “intended to assure the long-term viability of Opel.”
Under the offer, they will purchase 55% interest in Opel, which would be owned by a 50:50 Magna/Sberbank Consortium. This trims the size of the Russian holdings from 35% in the previous offer. General Motors Company would have a 35% interest, and Opel employees get 10% as part of a new labor agreement.
GM is said to be seeking a way to regain controlling interest in the future since Opel engineering is crucial to its ongoing product development needs. CEO Fritz Henderson said in June that he anticipated GM will maintain a substantial, but still minority stake in Opel.
At the very least GM is pushing for assurances that it has a major voice in future product decisions, but the company is not commenting on further details of the offers. Increasing the holdings of Magna, with which GM has extensive and long standing business dealings, might be one way to assuage GM’s fears.
Magna said the revised offer was made in response to a request by General Motors for final offers regarding Opel. The offer contemplates a total equity investment by the Consortium of about €500 million over time. The offer is contingent on European loan guarantees of €4.5 billion.
GM is also studying at least two other bids — one from a financial holding company called RHJ International, and another from Beijing Automotive Industry Holding Company. GM’s ownership, at 40% and 49% respectively, in these proposals is larger than it would receive under a Magna deal.
Insiders say the German Government, which has advanced €1.5 billion in short-term loans to keep Opel solvent and said Magna was the preferred buyer back in May, is pushing GM to pick Magna. An earlier Fiat offer is unchanged and doesn’t appear to be a contender.
General Motors is expected to review all submitted offers for Opel and determine the next steps required.
Acceptance by GM of an offer is only a first part in a complicated process since it involves the German, British and Spanish central governments, as well as various German ministries and the federal state governments of Hesse, North Rhine-Westphalia, Rhineland-Palatinate and Thuringia, among others. Any sale of Opel by GM would still be subject to finalization of definitive agreements and other conditions, including union agreed employment levels at Opel and Vauxhall plants, as well as the amounts and sources government-backed financing.
Back in March, an Opel supervisory board plan irked European Union officials, who were openly dismissive and content to see Opel vanish. That survival plan was being discussed with individual European countries for €3.3 billion in loans to bridge what GM estimates will be a five-year period before car sales in Europe return to “normal levels.”
However, individual country governments under pressure from their voters — including Germany, Belgium, the UK and Spain — are not of the same EU opinion and want to save jobs, so an Opel rescue plan continues to move ahead.