2 min read.Updated: 10 Sep 2009, 04:54 PM IST Reuters
GM has decided in principle to sell Opel: sources
Frankfurt: General Motors has decided in principle to sell its European carmaker Opel, two people familiar with the negotiations told Reuters on Thursday.
“They will sell it under conditions," one of the sources said.
GM is set to end months of suspense over the fate of its Opel unit and announce whether it plans to sell the European carmaker to one of two rival bidders, Canadian automotive supplier Magna or financial investor RHJ.
GM Europe had no comment.
GM said in a statement its board had taken a decision on Opel after a two-day meeting. A Sky News report, citing unnamed sources, said GM had taken a decision to keep the operation.
Sources familiar with the proceedings told Reuters GM had dispatched its chief Opel negotiator John Smith to Berlin, where he was expected to brief the trust supervising Opel and German government officials before a news conference scheduled around 4:00pm.
“General Motors’ board of directors approved a course of action for its Opel subsidiary and will be communicating its recommendation to the German government, other European governments, both bidders, employees and the Opel trust board over the next 24 hours," GM said.
It was not immediately clear what action the GM board had chosen after spending the past month weighing the merits of selling its European unit against the cost of keeping it.
The decision is being closely watched in Germany, where Opel employ roughly half of its 50,000 European workers at four plants. It also has major sites in Belgium, Britain, Poland and Spain.
Chancellor Angela Merkel, facing an election on 27 September, has thrown her weight behind Canadian auto parts group Magna’s bid for Opel, promising €4.5 billion ($6.6 billion) in government guarantees if GM opts for the Russian-backed offer.
But GM management has said a rival bid by Brussels-listed RHJ International, which Berlin is refusing to help finance, would be easier to implement. Some elements within the GM board are known to have favoured keeping Opel.
GM faced a dilemma with Opel because all of its choices carry risks. The carmaker is struggling to turn itself around under the majority ownership of the US government.
Selling to Magna, as urged by the German government, was frowned upon by some GM executives because they feared it risked losing key small car technology and an edge in the fast-growing Russian auto market, people familiar with the deliberations have said.
The Magna plan involves an equity stake in Opel for Russia’s Sberbank and a partnership with the Russian automaker GAZ Group.
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