Jump to content
  • Welcome Guest!

    Founded in 2001, CheersandGears.com is one of the oldest continuously running automotive enthusiast communities on the net. 

    Sign up is free and easy, come join the fun!

Sign in to follow this  

GM expected to hold on to Opel

Recommended Posts

GM expected to hold on to Opel

By John Reed in London

Published: September 10 2009 10:40 | Last updated: September 10 2009 10:40

General Motors is expected to announce in Berlin later on Thursday that it is shelving plans to spin off its European Opel and Vauxhall businesses, people familiar with its thinking say.

The announcement will follow a two-day meeting of the carmaker’s board in Detroit, and will come after a protracted and fruitless effort lasting almost six months to find an investor for Opel acceptable to GM’s managers and the five European countries where it has plants.

Two people familiar with GM’s thinking, citing internal discussions within the company, told the Financial Times that the most likely scenario to be announced would be the carmaker retreating from plans to sell Opel, GM’s German-headquartered European arm that sells cars under the Vauxhall brand in the UK, to outside investors.

However, neither of these people had been briefed directly on GM’s plans.

“The noise in the system is that yes, they want to retain it,” one of these people said. “The speculation is very rife that there is a decision, and the decision is to keep the business.”

GM is expected to outline its plans at a press conference to be held between 1pm and 3pm German time on Thursday.

Any retreat from a sale is likely to create anger in Germany, Opel’s largest country of operation, whose government extended a €1.5bn bridging loan to GM in May to keep Opel afloat while it tried to find agreement on a buyer.

German unions have vehemently opposed GM’s continued ownership of Opel, and the long-running sale talks have become a major political issue in the run-up to the general election in the country on September 27.

However, it will probably be greeted with relief in the UK, GM’s second-largest market and country of operation in Europe. Government and union officials in the UK have expressed confidence that Vauxhall’s two plants will be safe from closure under a scenario whereby GM rather than Germany calls the shots on its European manufacturing footprint.

GM says it has three plants more than it needs in Europe out of a total of eight. Germany extracted concessions from the two shortlisted bidders that none of the four plants in the country would be closed, as part of terms of up to €4.5bn in state loan guarantees to underwrite the spin-off.

But GM’s board last month rejected a recommendation by its management to accept the Magna-led bid for Opel. GM preferred a rival bid by Brussels-listed investment group RHJ International, but Germany’s government said it was unwilling to provide loan guarantees backing that deal.

GM then began re-examining its original plan to retain ownership of Opel with the help of about €3bn in financing from European governments and other sources, people familiar with its plans told the Financial Times in August.

This might come through a combination of loan guarantees from the UK, Spain and Poland, where GM also has plants. After these plans came to light, German officials also privately signalled that they might bankroll a plan under which Opel would remain independent under GM’s ownership.

However, Berlin would be likely to be an even tougher negotiating partner for GM after the elections this month.




Share this post

Link to post
Share on other sites

Your content will need to be approved by a moderator

You are commenting as a guest. If you have an account, please sign in.
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Sign in to follow this  

About us

CheersandGears.com - Founded 2001

We ♥ Cars

Get in touch

Follow us

Recent tweets