Latest news: what Magna's deal means for GM Europe
Newsflash: Magna 'agrees to buy GM Europe': latest news
29 May 2009 19:31
Canadian parts giant Magna this afternoon struck an agreement in principle to buy stricken GM's European arm, Opel and Vauxhall. The agreement has not yet been confirmed publicly and is still in the early phase, but brings to an end an uncomfortable round of talks in the past 48 hours which saw a spat between American negotiators and European politicians, and Fiat CEO Sergio Marchionne walking away from the table.
Once sealed, the deal must first be approved by the German government, which is to provide interim funding to the new owners. However, Italian car maker Fiat isn't yet totally ruled out of the running, as Magna's chief exec earlier today intimated that he could be interested in cooperation.
CAR Online will update with the latest developments as they happen. Stay tuned!
Other key developments today
• GM's US mothership is set to declare Chapter 11 bankruptcy on Monday 1 June 2009
• Germany has already offered €1.4bn in loan guarantees
• But GM rocked the table by demanding a further €300m at the last minute
• Magna to inject between €500m and €700m into Opel
• Magna will restructure Opel and Vauxhall so they can survive independently of GM
• Plans for individual factories are unclear at this stage
• 2500 jobs to go in Germany (a tenth of the workforce)
• Magna plans to hold a 35% stake, 10% will be owned by Opel/Vauxhall employees
• Magna's bid backed by Russian stated-owned bank Sberbank and oligarch Oleg Deripaska's car business Gaz
Who are Magna?
Magna is a Canadian automotive specialist. Although well known in the industry, it has little public profile, despite employing 70,000 staff in 25 countries.
Reaction as Magna swoops on Opel/Vauxhall
'If the Opel transaction is not available to Fiat, life will move on.'
Sergio Marchionne, Fiat CEO
'[Magna] made it absolutely clear that they would be committed to continued production by Vauxhall in the UK. I will be seeking a very early meeting to reinforce that commitment. It looks as if GM in Europe can be saved, it can be turned around. Of course it will involve change, there is excess capacity.'
Peter Mandelson, UK business secretary
'I’m delighted Opel/Vauxhall’s future looks a little more secure. But there are still unanswered questions: how deep will Magna’s cuts be, and which plants will go? Make no mistake, the German government will expect payback on its loan guarantees, and that might mean highly efficient plants in Britain unjustly take a fall. And we shouldn’t forget that Opel/Vauxhall is expected to make a $3bn loss in 2009, which means Magna will need very deep pockets to turn around this business. Opel and Vauxhall aren’t out of intensive care yet.'
Phil McNamara, editor CAR Magazine
>> Further news, reaction and analysis over the weekend