Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Companies / GM meets German govt to discuss Opel bids
BackBack

GM meets German govt to discuss Opel bids

GM meets German govt to discuss Opel bids

Premium

Berlin/Frankfurt: General Motors officials meet German government representatives on Wednesday to discuss takeover offers for Opel, with a potential row looming as they each appear to prefer a different bidder.

GM has received three bids for Opel — from a consortium of Magna and Sberbank, private equity firm RHJ International, and China’s Beijing Automotive (BAIC) — and now has to agree with Germany on the investor.

The German government, and the German states with Opel sites, have indicated a preference for Canadian auto supplier Magna, while GM likes the offer from RHJ, a Belgium-based financial investor.

Several people familiar with the matter said on Wednesday that the states that are home to Opel factories still prefer Magna’s offer over the bid made by RHJ. The states of Rhineland-Palatinate, Hesse, North Rhine-Westphalia and Thuringia discussed the matter on Wednesday, two sources said.

GM holds 35% of Opel shares, while the German government is being asked to provide loan guarantees worth up to €4.5 billion ($6.4 billion).

If they disagree, the end game will play out in the Opel Trust which has been responsible for Opel since GM entered bankruptcy in June. The trust holds 65% of Opel shares and has to approve of any investor.

The Trust’s board is comprised of two GM representatives and two for Germany, one for Berlin and a delegate for the four federal states in which Opel has a plant. There is a fifth “neutral" board member — Fred Irwin, president of the American Chamber of Commerce in Germany — but he has no vote. He may, however, be forced to try to actively broker a deal.

Magna wants to expand Opel’s full-scale car assembly business and forecasts high growth rates, particularly in Russia, home of its consortium partner Sberbank.

RHJ envisages shrinking Opel’s production footprint and returning the company to profitability.

A German government source said on Tuesday that Wednesday’s meeting would not yield a decision on which bidder will succeed in taking a stake in Opel, and that it is unlikely a preliminary decision will be made on Opel’s future this week.

Separately, representatives of Magna are scheduled to meet the heads of the European Opel dealers’ association to discuss their involvement in the sales and distribution structure.

The association originally planned to collect a half a billion euros from its 4,000 dealers to buy a stake of between 10-20% and a seat on the board, but its offer has largely been ignored despite the sizeable equity investment.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 22 Jul 2009, 02:59 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App

Chat with MintGenie