While General Motors thrashes out the intricacies of its future in a US bankruptcy court, across in Europe the future of its loss-making Opel/Vauxhall subsidiary also hangs in the balance.
It seems increasingly likely that a majority chunk of GM Europe will end up in the hands of Canadian car parts maker Magna International and its Russian banking partners.
However, GM continues to have a dalliance with other contenders, including Italy’s Fiat and the Chinese carmaker Beijing Automotive.
Reuters Newsagency quotes sources close to the Magna deal as saying the company’s board of directors is scheduled to approve on Tuesday a business plan for the acquisition of GM Europe.
The Canadian car parts supplier and Opel parent General Motors have already clarified most of the major issues in weeks of tough negotiations and they expect to resolve the last few issues holding up the takeover by July 7, the sources said.
At the same time reports say Beijing Automotive Industry Holding Corporation (BAIC) will unveil an improved non binding offer for Opel/Vauxhall.
The German newspaper cited sources close to BAIC for its story. BAIC declined to comment earlier on reports it was going to submit a bid in the coming days.
Meanwhile Reuters says the Magna business plan would serve as the basis for talks with lenders such as Commerzbank, which would finance the takeover, helped by an estimated 3 billion euros (US$4.23 billion) in European state loan guarantees.
Many of the major points still open were clarified at a meeting on June 25 between GM CEO Fritz Henderson, lead GM negotiator John Smith, Magna Co-CEO Siegfried Wolf and Magna Chief Operating Officer Herbert Demel, one source said.
“They came significantly closer to one another in the key points,” the source said.
Talks between GM and Magna have been slowed by disagreements over the use of GM’s technology and engineering designs, rights to Chevrolet in Russia and GM’s attempt to insert a buy back clause into the deal, media reports say.
“The only remaining issue is whether ‘New Opel’ gets the sales distribution rights to GM’s Chevrolet brand for the Russian market, but a solution should be achievable here,” another person close to the talks said.
Magna is the front-runner to take a majority stake in Opel/Vauxhall with a consortium including Russian state bank Sberbank and Russian carmaker GAZ.
Throughout the negotiations GM has said it continues to talk to other potential buyers for GM Europe, including Belgium-based holding company RHJ International and Beijing Automotive.
Once the financing is lined up, Magna and GM would draft a contract that could be signed by July 15.
Majority control over Opel, which also includes plants in Spain and Vauxhall factories in England, is being sold as a precondition to state aid for the German carmaker now that bankrupt GM can no longer afford to finance its foreign subsidiary.