GM's Opel Sale Faces Fresh Uncertainty

[Ford Jellymoulds]

More uncertainty was injected into the planned sale of General Motors Co.'s Opel to a group led by Magna International Inc. as Spain urged European regulators to investigate the agreement and Germany's Free Democrats, consistent critics of the deal, were poised to win a powerful voice in Germany's new government.

 

The deal has run into steady fire from Magna customers and European governments alike since the Canadian auto-parts maker reached a preliminary agreement to buy a majority stake Opel earlier this month.

 

Spain's industry minister added to the criticism over the weekend, asking EU commissioners to examine whether the deal unfairly spares Opel's German operations from job cuts and possible plant closures that are planned.

 

 

 

Germany's election results may add another snag. The decisive gains of Germany's business-friendly Free Democratic Party in Sunday's elections assured it a heavyweight position in a new governing coalition with Angela Merkel's Christian Democrats.

 

Ms. Merkel threw her weight early on behind the Magna deal with €4.5 billion ($6.6 billion) in pledged loans to keep Opel going. But the Free Democrats have criticized the rescue plan as a waste of German-taxpayer money.

 

 

 

But if serious cracks emerge in the deal, the new government may find less reason to keep fighting to push it through, some analysts said.

 

"Overall, this deal is not as near to completion as many people are trying to present," said Tim Urquhart, an automotive-industry analyst at IHS Global Insight in London. "There are still many more twists and turns."

 

The biggest threat is the possibility the European Union could block the government-aid-backed deal or demand it be significantly restructured. Government officials in the U.K., Belgium and Spain, where Opel has factories, have asked EU competition officials to scrutinize whether Germany is engaging in protectionism in exchange for the loans.

 

Under the terms of the deal, Magna and its partner, Russian bank OAO Sberbank, plan to take a 55% stake in Opel, which GM is giving up as it emerges from bankruptcy.

 

 

 

"We cannot accept one government bribing companies in order to steal or end the jobs of another," she said at an antitrust conference at Fordham University.

 

The Magna-led deal has also ruffled the feathers of some of the auto-parts maker's customers, such as Volkswagen AG and BMW AG, which have expressed concern about sharing technical secrets with a supplier that now stands to become a direct competitor in making cars.

 

Volkswagen in particular said it is prepared to pull business in areas where it shares "development know-how" with Magna.

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[J-150]

this could be the first of many cracks that break up the European Union.

[Cougarpower]

:happy feet: :happy feet: :happy feet: :happy feet: :happy feet: :happy feet: :happy feet: go Opel break the EU and at the same time let Opel dissapear

[92merc]

While I don't see the EU breaking up over this, I do see Opel being signed off into oblivion. GM just shuttering the line and sell off the name some time down the road, if it is still worth anything.

 

Not that I'll care...

[J-150]

While I don't see the EU breaking up over this,

 

 

not this alone, but when individual governments start to see that the Union is costing them more than they get back, they may decide to go it alone.