GM to sell Opel to Magna by end of November
September 11, 2009 by Matt Brogan
The General Motors board has chosen to sell 55 per cent of its European subsidiary Opel/Vauxhall to Canadian parts manufacturer Magna International and its Russian partner Sberbank by November 30th.
A senior executive from General Motors said it should close a deal with Magna and Sberbank by the November deadline.
“I see no obstacles to getting the deal done successfully by the end of November,” said Mr John Smith, GM’s chief negotiator for the deal.
Mr Smith said GM will continue to cooperate closely with Magna on platforms, powertrains, manufacturing and purchasing.
GM announced Thursday that it plans to sell a majority stake in Opel and its British sister brand Vauxhall to Magna and the Russian state lender Sberbank.
The deal to go with Magna/Sberbank has come after months of wrangling, during which GM actually considered trying to hold onto the European operation, which provides vital research and development work for the company worldwide.
GM apparently gave up on its attempt to keep Opel/Vauxhall during a board meeting earlier this week, which heard an independent report by financial consultants that said it would need at least US$6.1 billion in additional funds to retain the European operation.
Under the proposal, Magna and Sberbank would each own 27.5 per cent of the company, while Opel employees would hold 10 per cent and GM the remaining 35 per cent.
As part of the deal about 10,000 European jobs will be cut, a quarter of those in Germany.
The German government will provide €4.5 billion (US$6.6 billion) in financing to carry the German-based carmaker through a restructuring period in addition to the €1.5 billion (US$2.2 billion) it loaned Opel in May, Mr Smith said. Other European governments with significant Opel operations will cover some of that amount, he said.
Magna and Sberbank will provide another US$500 million equity investment, Smith said.
Mr Smith said Magna aimed to make Opel profitable by 2011 and the carmaker should be able to repay the government loans used to back the deal by 2014 and begin paying dividends by 2015.
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But who owns the property in the Opel/Vauxhall designs, especially Insignia and Astra? If this will remain with Opel who will own the same cars when produced in China – important because a re-grilled version of the Insignia is already in production in China as a Buick? And will the “new” Opel be able to sell its cars outside Europe either to GM subsidiaries or through its own distributors i.e might we see Insigias or Astras sold by Holden, or more interestingly, in competition with Holden products?
So many questions….
Keep dreamin HOLDEN LOVER.!
OP makes a good point Schah7, GM has fought like hell to avoid this sale(not done yet either)for the very reason he queried, could Opel be competing directly against GM in world markets.
The answer is mainly europe for now, partic Russia as the Magna consortium has indicated they want to pursue dev with other Russian carmakers. Russia is at the moment one of GM’s biggest markets, Opel will enter in time and kill GM with the right products.
GM partic wanted a contractual condition that would keep Opel out of China, we all know why, another key GM market which I suspect Opel will do well in.
GM just added another player to the field, one that will specifically compete against GM product, not good news. Still, lets see what happens shall we.
Doubt if we will see Opel product in OZ purely from a costing perspective, still you never know.
GM is pretty stuffed, the US feds want it off their books sometime in 2010, whose going to buy it?
To Schach7 – this isn’t a Holden/Ford thing.
My questions were about what products Magna-Opel will be making and where they will they be selling them? Has GM restricted either the products and/or areas of sale? It is not only about selling in Russia? What about Africa, or Latin America? Also, it is fine for Magna-Opel to be producing Insignias and Astras now – but where and by whom will the next generation of Opels be designed?
Fair comment “Chaps” er: Max & onepoppa.
See ya point.