Greasing the wheels

"We the government have done the homework, the contracts have been drawn up, and now the ball is in General Motors' court," said Economics Minister Karl-Theodor zu Guttenberg on German television on Friday, Sept. 4.

But since Berlin provided Opel with a 1.5-billion-euro bridging loan to help the car group through its current upheaval, it has a decisive say in the outcome - and would like to see Opel sold to Magna International. The German government has endorsed a bid from the Austrian-Canadian auto supplier to acquire a majority holding in Opel by offering state-backed guarantees worth about 4.5 billion euros.

Magna is leading a joint bid with state-owned Russian bank Sberbank and Russia's second-largest auto maker, GAZ.

Chancellor Angela Merkel told the daily Westdeutsche Allgemeine Zeitung on Friday that Magna's concept was "the most viable and the most sustainable."

But she also stressed that GM had to make its own mind up.

"We hope (its decision) will be in the interests of the company and its employees," she said.

Decision time

The head of General Motors in Europe said Magna was indeed well positioned to win the drawn-out battle to take over the US car maker's Opel division.

German daily Die Welt this week quoted Carl-Peter Forster as saying that Magna would "most likely" win the takeover bid since all the contracts and financing were in place for it to do so. But he did not rule out the possibility that GM could keep control of Opel and GM's British-based Vauxhall division instead.

Speculation has been rife that GM is considering retaining control instead of hiving off a majority stake in the group, which includes the Opel and British Vauxhall brands.

Quoting what it said was a GM official involved in the negotiations, the Wall Street Journal reported that the auto group was prepared to pour more than 1 billion euros of its own money into restructuring Opel.

According to German press agency dpa, GM has been considering the investment plan in the event that it fails to sell off the majority stake in Opel to the groups bidding for control.

"Should the negotiations with the bidders not reach a satisfactory result then alternatives must be examined," said a source close to the negotiations.

Weighing the options

The General Motors board decided last month against making a decision on Opel, with company officials indicating that GM would like Berlin to consider an alternative offer for its European subsidiary, drawn up by the Brussels-based private equity group RHJ International.

RHJ International earlier this week raised its offer for a 50.1-percent stake in what has been described as the New Opel by 25 million to 300 million euros in cash.

The talks over Opel come at a crucial time for German Chancellor Angela Merkel, with parliamentary elections just weeks away.

The other European nations where Opel has operations - Spain, Britain and Poland - have been concerned that the financial support offered by Berlin meant that they would bear the brunt of any cost cutting launched by the new owners of Opel.

Plunging car sales forced GM earlier this year to launch a major restructuring of its global operations, including selling off a majority stake in Opel.

jp/dpa/afp

Editor: Kate Bowen