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GM Reportedly Reaches Deal to Sell Opel

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http://www.marketwatch.com/story/fiat-wont...n-gms-opel-unit

By Simon Kennedy & Shawn Langlois, MarketWatch

SAN FRANCISCO (MarketWatch) -- General Motors Corp. and Magna International Inc. reportedly hammered out a deal Friday that could rescue GM's German Opel division ahead of the U.S. automaker's expected bankruptcy filing.

The two sides reached a framework agreement and are trying to work out as many of the details as possible before meeting with German Chancellor Angela Merkel in order to sign a memorandum of understanding, according to Reuters.

The sides have been negotiating over a deal that would serve as the basis for around 1.5 billion euros ($2.1 billion) of bridge financing.

Earlier, Italian carmaker Fiat decided not to attend a meeting arranged by the German government to discuss the emergency funding for the GM unit, but had said it remains interested in a deal for the European business.

Fiat Chief Executive Officer Sergio Marchionne said in a statement to the Italian stock exchange that the company was "perplexed" by the fact that it wasn't told until earlier this week about key financial information that was essential to formulating a deal.

Talks hit a stumbling block earlier in the week after GM reportedly demanded an extra $415 million in cash. See related story.

"Given the nature of the process itself and its short duration, Fiat has been unable to have full access to the financial records of Opel to determine its precise financial condition and thus properly frame a merger proposal," Marchionne said.

He added that the latest round of requests would require Fiat to provide emergency funding for the GM unit, while the government determined the exact timing and conditions of its interim financing.

"We remain committed to finding ways to bridge the expectations of both General Motors and the German government, but the emergency nature of the situation cannot put Fiat in a position to take on extravagant risks," Marchionne said.

Shares in Fiat dropped 1% Friday, while most other European auto stocks moved higher.

Fiat had offered to contribute its own auto-business assets to a merger on a debt-free basis, thus providing equity for the deal.

But Magna International had still been considered the favorite as it has the backing of unions and politicians from the regions where Opel has plants.

The German government reportedly said Friday that talks would only go ahead if GM and a potential investor can provide substantial plans, such as a letter of intent.

Chrysler CEO Robert Nardelli told a New York bankruptcy court that the sale of most of Chrysler's assets to Fiat could close later on Friday.

GM, meanwhile, is expected to file for bankruptcy on Monday after a group of bondholders accepted a sweetened swap offer. See full story.

Simon Kennedy is the City correspondent for MarketWatch in London. Shawn Langlois is a reporter for MarketWatch in San Francisco.

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BOOYAH! :CanadaEmoticon:

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maybe they can supply Saturn dealers.

:neenerneener::neenerneener:

No. I'm 99% sure the MoU will forbid that.

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No. I'm 99% sure the MoU will forbid that.

Not unless Magna goes ahead and buys Saturn. That would be amazing. In someways GM will still have Saturn.

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Not unless Magna goes ahead and buys Saturn. That would be amazing. In someways GM will still have Saturn.

With which products, though? If Opel will feed Buick, those plans won't be just thrown out the window because Magna bought 55% of Opel...

Wonder what stakes, if any, GAZ's and Sberbank will have as they are part of the Magna-led bidding consortium... also if the German Goverment aid package won't be converted to equity sometime in the future...

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With which products, though? If Opel will feed Buick, those plans won't be just thrown out the window because Magna bought 55% of Opel...

Wonder what stakes, if any, GAZ's and Sberbank will have as they are part of the Magna-led bidding consortium... also if the German Goverment aid package won't be converted to equity sometime in the future...

No not really. If Saturn can have Corsa platform and smaller vehicles than Astra and restrict itself to the small lineup it will not cross with Buick.

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Nice to see a Canadian company getting the nod instead of Fiat. ( :canada: ).

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No not really. If Saturn can have Corsa platform and smaller vehicles than Astra and restrict itself to the small lineup it will not cross with Buick.

That would be the Corsa and what else? Meriva? Agila? The Meriva could be interesting, but in all honesty I don't see Americans buying the Agila...

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That would be the Corsa and what else? Meriva? Agila? The Meriva could be interesting, but in all honesty I don't see Americans buying the Agila...

A small 3-5 door hatchback, wagon, sedan, coupe and convertible will not be a bad option.

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A small 3-5 door hatchback, wagon, sedan, coupe and convertible will not be a bad option.

Don't know if Gamma would be that flexible. Also, Opel would have to have money to develop all of those variants on the platform. I suspect keeping Opel's current business plan will absorb all the money that Magna and the Russians will pump into it...

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i was at the saturn dealer today and talked with one of the reps and he mentioned the magna deal and that saturn is indeed hoping it means they will become the new retailer of all the opel design

saturn gets revenge. and if this is the case, i am not stuck with buying a chevy or a buick. if this turns out, i think saturn fans will be pleasantly happy!

what sucks is if this is what happens why pontiac had to die and GM is left with union / gov. union owners and nothing but korean cruzes and buicks to look forward to.

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