German government officials met with General Motors' top negotiator on Tuesday, hoping to get answers on why the U.S. carmaker has so far failed to choose a buyer for its European unit, Opel.

GM's board was expected to pick either Canadian automotive group Magna or Belgium-based RHJ at a meeting on Friday, but the U.S. carmaker's directors declined to endorse a sale to either of the two bidders.

The goal is to find out the reasons why the GM board was unable to take a decision, one German official, who requested anonymity, told Reuters.

The failure disappointed both politicians and labor in Germany, with unions threatening spectacular measures to force a decision, while the German government warned against a confrontation with GM. [ID:nLO499169]

Talks to sell Opel have gone on for months and are a political hot potato ahead of German elections in September, because of the state support required for the eventual buyer and the thousands of job cuts expected to follow any sale.

Chancellor Angela Merkel and the German states that host Opel plants have been putting pressure on GM to accept Magna's offer, made together with Russian partner Sberbank , because they think Magna would save more jobs.

But GM's top negotiator for the Opel deal, John Smith, has repeatedly cited the positive aspects of RHJ's offer, which he says would be easier to implement than Magna's plan.


Sources with knowledge of the deliberations told Reuters on Monday that GM was considering dropping plans to sell Opel altogether and instead raising $4 billion to keep the unit. The news flummoxed German politicians and labor.

Because GM is barred from using funding from the U.S. government to support its international operations, one of the options could include raising money by selling or mortgaging the automaker's assets in China, one source said.

By not selling Opel/Vauxhall, GM has essentially two options -- providing 3 billion euros ($4.3 billion) to continue operations (less than the 4.5 billion promised by the German government) or liquidation, said credit analysts at UniCredit.

German deputy chancellor Frank-Walter Steinmeier, a social democrat who will face Merkel in the federal elections, said on Tuesday he expected GM to stick with plans to sell Opel to an investor.

Berlin and the German states have made clear they want Magna to get Opel and are set to hand out 4.5 billion euros in state aid to make it happen.

Germany has already provided 1.5 billion euros in bridge financing. Hence, German trustees overseeing a majority stake in Opel have to approve any deal after it clears the GM board.

(Additional reporting by Tom Kaeckenhoff and Angelika Gruber; Editing by David Holmes and Will Waterman)

($1=.6990 Euro)