BERLIN — General Motors Co. said Thursday that Canada's Magna International Inc. and Russian lender Sberbank would take a majority stake in its European subsidiary Adam Opel GmbH.
GM said it would keep a minority stake and continue to develop vehicles in partnership with Opel. It said key issues — including agreement from labor unions to unspecified cost reductions and a financing package from the German government — would have to be finalized, but it expected the deal to close in the “next few months.”
The deal was cheered by German Chancellor Angela Merkel, who saw it as a jobs saver ahead of Sept. 27 national elections. Magna agreed to keep Opel's four German plants open.
Klaus Franz, the chairman of the European Employee Forum of General Motors said GM's decision was embraced by workers.
“I am aware that it was a tough decision to be taken by the GM board of directors, but I am glad that the time of uncertainty for the future of the Opel and Vauxhall brands and company is over.”
He said the next most important task for worker representatives was to avoid plant closures and layoffs during the restructuring process.
“Alternatives are at hand. We have developed viable alternatives and we will put them on the negotiation table,” Franz said.
Auto parts firm Magna and Sberbank will purchase a 55-percent stake and GM will hold 35 percent. The remaining 10 percent will go to workers.
“This is what the government wished,” Merkel said. “Opel still has a difficult way ahead of it, but I trust the workers will take on the task.”
Merkel said talks would be held with other countries where Opel has locations in the coming weeks to ensure the burdens of restructuring could be shared fairly. Germany's lead role in pushing the Magna deal led to fears it would seek to protect its workers first.
“It's possible now that GM and Opel will find a new way in Europe,” she said. “We've taken a big step on the way ahead. We can have a new beginning.”
British Business Minister Pat McFadden said his government's objective had been to “get the best possible outcome” for Vauxhall's 5,500-person work force.
“We will now continue our discussions with Magna: they have told us of their commitment to continuing production at both Ellesmere Port and Luton and we will work to make sure we get the best possible outcome for the UK,” he said.
Merkel's government favored the Canadian-Russian consortium's bid and offered euro1.5 billion ($2.2 billion) in bridge financing in May to keep Opel afloat. Merkel's government also offered another euro4.5 billion in credit for the Magna-Sberbank deal.
GM has been trying to unload Ruesselsheim, Germany-based Opel since it ran into severe financial trouble earlier this year. Industry analysts say the unit has too many employees and too much factory capacity for its sales level and its costs are too high.
But Opel and its engineers are also highly integrated into GM's global product development system, designing the underpinnings for its next generation of small and midsize cars.
Opel, which began building automobiles in 1899, was acquired by GM in 1929.
With the German government refusing to back a competing bid from investment company RHJ and no money to continue subsidizing the money-losing Opel, GM had little choice but to work out a deal with Magna and Sberbank, said Tim Urquhart, an auto analyst at IHS Global Insight in London.
“I think basically their hands were forced,” he said. “In the final analysis, the only other option was to shut the thing down.”
Although it's unlikely in the short term for political reasons, Opel's new owners will eventually have to shut factories and cut employees in Europe in order to make the Opel-Vauxhall operation financially viable, Urquhart said.
“No matter who would have been in control — GM, RHJ or Magna — I think many of the same things would have been done. Obviously they have too much capacity and things will have to be cut,” he said.
The Magna deal, though, allows GM to keep working with Opel's engineering and product development team while having someone else share in its operational costs, he said.
GM must have worked out a deal to stop the Opel technology from falling into the hands of Russian automaker GAZ, which has ties to the state-owned Sberbank, he said.
Opel engineers are responsible for developing the underpinnings for GM's next generation of small and midsize cars. The new Buick LaCrosse is built on an Opel Insignia platform, and GM's new global small cars are based on the Opel Astra.
GM's decision came after months of wrangling over who was best suited to take on Opel, which also has factories in Poland, Spain, Belgium, Portugal.
Fritz Henderson, GM's chief executive said GM will continue to work with Opel and Vauxhall to develop and produce cars, keeping Opel and Vauxhall as a part of GM's product development organization, “allowing all parties to benefit from the exchange of technology and engineering resources.
“The current portfolio of Opel and Vauxhall cars and the models in the pipeline are a strong basis for future success.”
GM had said it preferred another bid from Brussels-based investment firm RHJ International, in part because of fears that patents and other GM property could wind up with competitors, especially in Russia.
The Opel Trust overseeing Opel also approved the deal.
Opel employs some 49,000 workers across Europe, including 25,000 in Germany where it counts four major plants, along with Opel's headquarters.
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