Magna, Opel upbeat that sale will go through

By @ibtimes on

Top officials from Magna and Opel expressed confidence on Wednesday that General Motors will go through with selling its European arm to Canada's Magna despite a second chance to review the deal.

GM's board of directors is due to meet on Tuesday to reconsider its decision in light of assurances from Germany that 4.5 billion euros ($6.68 billion) in state aid was available to any Opel buyer -- not just Magna, Berlin's favored bidder.

Asked what the chances were that GM would seize on European Union competition authorities' misgivings about the state aid and reverse its decision, Opel Chairman Carl-Peter Forster told Reuters: I would see them at clearly below 50 percent.

Magna Co-Chief Executive Siegfried Wolf also took an upbeat line at the Automobil Forum Graz industry conference.

I am convinced that we will sign the contract soon if the EU...agrees. We are very, very hopeful, he said.

Forster told the conference that sale contracts were practically ready to be signed and he hoped they could be inked quickly once GM gives the green light.

A source had told Reuters last week that there was still a possibility that GM's board could opt out of a sale of Opel in favor of keeping the European carmaker.

GM and Germany's Opel Trust -- set up in May to keep Opel from being dragged into GM's brief U.S. bankruptcy -- have to inform Berlin that they would still have picked Magna as Opel's buyer even knowing that any buyer would get state aid.

The German government then needs to tell Brussels.

Magna and its Russian partner Sberbank are set to get a 55 percent stake in Opel under the deal. GM would keep 35 percent and Opel staff would get 10 percent in return for labor cost concessions.

Magna's group won Berlin's backing by proposing to keep all four Opel plants in Germany open. Half of Opel's 50,000 workers are based in Germany.

This triggered suspicions in other countries with Opel plants -- including Britain, Belgium and Spain -- that Berlin was using pledges of state aid to get favorable treatment for its domestic car industry.

Financial investor RHJ International and carmakers Fiat and BAIC had also been in the running for Opel, although RHJ has since said it is no longer interested.

It remains unclear how Germany's new center-right government will view the deal, which returning Chancellor Angela Merkel helped broker.

The liberal Free Democrats (FDP), new partners of Merkel's conservatives, are broadly skeptical of the planned sale of Opel to Magna, but FDP member Rainer Bruederle, who is set to be sworn in as economy minister on Wednesday, has said there is no way the new government can stop it.

In another step toward the consolidation of Europe's car industry, U.S. automaker Ford Motor Co named a consortium led by China's Zhejiang Geely Group Holding Co. as preferred bidder for its loss-making Swedish unit, Volvo Car Corp., but said more detailed talks were needed before any final agreement.

(Reporting by Boris Groendahl via Frankfurt newsroom)

($1=.6740 Euro)

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