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GM Agrees To Sell Opel Unit To Canadian-Russian Consortium

"I can say now that we are one step further ahead so that Opel can now make a new start, so to speak," German Chancellor Angela Merkel said.
(RFE/RL) -- German Chancellor Angela Merkel has announced that U.S. automaker General Motors (GM) has decided to sell its German-based Opel unit to a consortium led by the Canadian-Austrian auto parts maker Magna International. The consortium also includes Russia's state-owned Sberbank.

The German government had favored the Magna consortium -- offering $6.5 billion in fresh credit to GM on condition that it chose the Magna bid -- because any other resolution was expected to lead to the sale or closure of two Opel plants in Germany that employ some 25,000 workers.

Political analysts say closure of those plants would have damaged the election prospects later this month for Merkel's Christian Democratic Union and its parliamentary coalition partners, which are trying to show voters they are doing all they can to preserve German jobs in the midst of the global economic crisis.

"I can say now that we are one step further ahead so that Opel can now make a new start, so to speak," Merkel said. "This new start will not be easy. I have discussed it once again today with the [labor] chairman, Mr. [Klaus] Franz. But the happiness outweighs the [challenges] that this new start presents."

Before Merkel's announcement, there were signs of confrontation between the U.S. automaker and the German government over reports that GM had decided to cancel the sale, a move that would have led to the closure of the German plants.

Officials in Berlin responded to those reports by warning that they would expect GM to repay a $2.2 billion state loan by November if the sale of Opel was canceled or went to the sole rival bidder -- the Brussels-based private equity firm RHJ International.

Labor leaders in Germany also had threatened widespread protests -- including the formation of a human chain around Opel factories in Germany by thousands of workers -- if the decision had gone against the Magna bid.

Ties To GAZ

Their concerns had been heightened by statements from GM officials who had said in recent months that said they preferred the rival bid by RHJ, which was expected to restructure Opel with possible closure and retain control of GM's car designs and technologies.

GM officials had said the RHJ bid would be easier to implement. And they also have expressed concerns about the Magna bid because of its partnership with Sberbank, which has ties with the Russian automaker GAZ Group.

Some GM officials said they feared that selling Opel to Magna and Sberbank could cause GM designs and small-car technologies to fall into the hands of Russia's GAZ.

Analysts say those concerns may have been alleviated through details of the deal that have not yet been unveiled. Some job cuts within Opel's European plants also are possible.

It also remains unclear what the exact size of the shareholdings will be. According to initial reports, Magna and Sberbank would receive a 55 percent stake in Opel, while GM would retain a 35 percent stake, and Opel workers would control 10 percent.

A final decision on the future ownership structure of Opel rests with a German government-backed trust that is currently overseeing the day-to-day affairs of the auto group. That trust would not have been consulted if GM had chosen to cancel the sale of Opel.

The selling off of a majority stake in Opel had been announced earlier this year after plunging car sales caused GM to launch a major restructuring of its global operations. But since then, the U.S. automaker has emerged from bankruptcy and a new GM board has been appointed.