GM Board Said to Consider Offers, Insolvency for Opel Today

GM Board Said to Consider Offers, Insolvency for Opel Today


Aug. 21 (Bloomberg) -- General Motors Co. directors will meet by conference call today to discuss bids for its Opel division, two people familiar with the planning said.

The board will weigh two bids against insolvency, said one of the people, who asked not to be identified because the deliberations aren’t public. A group led by Aurora, Ontario- based car-parts maker Magna International Inc. is likely to win the bidding, because Germany’s 4.5 billion euro ($6.4 billion) financing package favors it, the person said.

A decision by GM about the bids has been delayed because of the automaker’s concerns that an earlier Magna bid would exploit GM’s intellectual property in Russia. Magna’s investment partner is Moscow-based OAO Sberbank. A competing bid from Brussels- based investment firm RHJ International SA was described as a “simpler proposal” by GM’s top negotiator.

“What’s critical is that GM have some semblance of control over the global platforms,” said Michael Robinet, an industry analyst at CSM Worldwide in Northville, Michigan. “Looking toward a Magna alternative would allow GM to have a stake in an increasingly viable operation that someday they could invest in or divest from.”

When GM’s directors decide what the Detroit-based automaker wants to do, they will make a recommendation to the Opel Trust board, which must approve it. That board includes two GM representatives and two representatives of Germany. A fifth, so- called neutral member does not have a vote.

Merkel Wants Magna

German Chancellor Angela Merkel, faced with rising unemployment as national elections loom on Sept. 27, prefers the bid by Magna, believing it will secure more jobs. Her government is seeking to protect Opel employees as Germany emerges from its worst recession since World War II. GM Europe employs about 25,000 people in Germany.

She is “very critical” of RHJ’s bid, newspaper Frankfurter Allgemeine Zeitung reported, citing an interview.

GM’s board meets monthly and as needed for time-sensitive matters, said Julie Gibson, a GM spokeswoman. The company doesn’t provide details of the directors’ agenda, she said.

A Magna spokeswoman, Tracy Fuerst, declined to comment because the talks are private. A telephone message left at RHJ offices after normal business hours wasn’t immediately returned.

Magna fell 63 Canadian cents, or 1.2 percent, to C$50.16 in Toronto Stock Exchange composite trading yesterday. It has gained 36 percent this year.

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