UPDATE: GM, Magna Reach Tentative Agreement On Opel - Sources
May 29 2009 - 11:10AM
Dow Jones News
General Motors Corp. (GM) and Magna International Inc. (MGA)
have reached a tentative agreement on the purchase of GM's Adam
Opel GmbH unit, several people familiar with the situation told Dow
Jones Friday.
"There are clear positive signals in the talks ... A tentative
agreement on a possible deal has been reached," one person said,
adding that it remains difficult to predict when a final decision
by the companies might be reached.
GM and Magna officials in North America declined comment, but
one person familiar with the negotiations said: "Movement has
happened and details are being put in place," though noting that
any pact "still needs to be blessed by German government."
A final decision on an Opel sale would have to be made in the
U.S., but the German government's support is crucial for Opel's
prospects as the state is willing to provide EUR1.5 billion in
bridge financing to avoid the operations getting embroiled into the
expected bankruptcy proceedings of parent GM in the U.S.
German Economy Minister Karl-Theodor zu Guttenberg told
reporters in Berlin that there were new plans by Magna, which are
currently being discussed with GM and separately being examined by
the German government. He said this doesn't necessarily mean that a
final decision would be made today.
Italian automaker Fiat SpA (F.MI) said earlier Friday that it
remained interested in Opel but there was nothing more for it to
discuss until GM, the German government and U.S. Treasury had
settled their differences.
Fiat Chief Executive Sergio Marchionne said Fiat remains open to
continuing discussions, but that it was "unreasonable to expect
Fiat to provide funds" for Opel before the German government sets
up the interim financing.
Marchionne also said that Fiat was not able to perform proper
due diligence on Opel activities as it was unable to gain full
access to the financial records of Opel and, therefore, was unable
to make a proper merger proposal.
A spokesman for Fiat declined to comment on Magna and GM
reaching a tentative deal.
Fiat and Magna are the two remaining bidders for Opel, which
employs around 25,000 workers. Magna has teamed up with Russian
auto maker OAO GAZ Group (GAZA.RS) and state-controlled OAO
Sberbank (SBER.RS) in its bid for Opel.
After late night negotiations ending early Thursday morning, the
German government delayed a decision on providing state-backed
bridge financing to the Opel unit because GM on Wednesday submitted
a surprise request for additional cash of around EUR300 million.
Economy Minister zu Guttenberg and German Finance Minister Peer
Steinbrueck at the time criticized GM and the U.S. Treasury for
lack of transparency and demanded clarity on where German taxpayers
money would be spent. GM and the U.S. Treasury rejected the
allegations.
Government spokesman Thomas Steg said the government would only
back a bridge financing of up to EUR1.5 billion, and not more. He
also said a rescue of Opel "won't take place at any cost."
-By Christoph Rauwald and Nico Schmidt, Dow Jones Newswires; +49
69 29 725 512; christoph.rauwald@dowjones.com
(Sharon Terlep, Jennifer Clark and Beate Preuschoff contributed
to this story).