The fate of Opel/Vauxhall, the beleaguered European subsidiary of General Motors, hangs in the balance after 12 hours of talks broke down with GM revealing the company needed an extra 300 million Euros (US$415 million) to survive.
By David Twomey in Berlin
At the same time the talks did narrow Opel’s suitors down to two companies, Italian carmaker Fiat and the Canadian parts supplier Magna, when bids by Belgium-listed holding RHJ International SA and China’s Beijing Automotive Industry Corporation were rejected.
Fiat’s race to win control of Opel is part of Chief Executive Sergio Marchionne’s ambitious attempt to build an automotive alliance that could rank as the world’s second largest by sales behind Japan’s Toyota Motor Corporation.
Fiat has an ambitious plan to fold Opel and other GM Europe brands Vauxhall and Saab into a transatlantic car empire that would also include new US partner Chrysler.
German ministers said after more than 12 hours of talks stretching well into Thursday morning here, that they had been unable to reach a deal to provide Opel with temporary financing if GM files for bankruptcy in the United States.
“We have made demands on the U.S. Treasury and expect answers by Friday and we will need these answers in order to agree a plan,” Economy Minister Karl-Theodor zu Guttenberg said.
“We don’t have the security yet that we need to commit to bridge financing today.”
Finance Minister Peer Steinbrueck spoke of “surprises and disappointment” with the US negotiators, saying GM had shocked participants by announcing it needed 300 million Euros (US$415 million) more in short-term cash.
Choosing a final bidder for Opel and closing a deal could take months, time that neither the carmaker nor the German government have with GM expected to file for bankruptcy in days after a crucial bond exchange proposal failed.
To tide Opel over, Germany has put together a 1.5 billion Euro (US$2.1 billion) aid package, but has made this aid contingent on the US government and GM agreeing to its plan to temporarily place Opel assets in a trust, a move that would protect its patents and technology from GM creditors.
Mr Steinbrueck said he was hopeful a deal could be reached on Friday that would save Opel.
German Chancellor Angela Merkel had called the meeting to agree a plan to keep the carmaker running while negotiations with suitors are finalised
Opel traces its roots in Germany back to the 19th century and employs about 25,000 staff in four plants here. Its future has become the focus of a furious politically charged debate in Berlin ahead of a federal election in September.
The German led talks have caused some disquiet in other European capitals with leaders in Britain and Belgium complaining that the Germans are ignoring the 30,000 Opel/Vauxhall workers who are employed in countries outside of Germany.
In defence of the Germans it must be said that they are the only ones to have made any attempt to work out a solution for Opel/Vauxhall.