Bidding on Opel

A decision on the search for a new investor for German carmaker Opel will be made next week, Economics Minister Karl-Theodor zu Guttenberg said Friday.

Three firms have submitted bids to take over the European operation of troubled US carmaker General Motors (GM), among them Canadian-Austrian car parts and assembly group Magna, which has emerged as a favorite after top German officials said the group had submitted a better plan than rival bidders Fiat and Belgian-listed private equity investor RHJ International.

At a briefing in Berlin, Magna co-Chief Executive Siegfried Wolf laid out the company's Opel plan for the first time, confirming it aims to team up with Russian partners but leave existing GM Europe managers to run the new group.

Part of that plan includes a promise to retain all four Opel plants in Germany, where the company employs about 25,000 people.

Fiat has said it expects 10,000 jobs to be axed if its bid is accepted. Magna did not give an exact figure but information obtained by the German Press Agency dpa suggested 2,600 jobs would go, the bulk of them at the Bochum plant in North Rhine-Westphalia.

Saving jobs

Zu Guttenberg said Magna's concept was "interesting," but one that "raised questions," adding that the government had to weigh the risks involved if asked to provide state credits to finance new investments in Opel.

Magna said it wants the German government to make available four to five billion euros ($5.5 to 7 billion) in state guarantees to support the new operation.

The German government is expected to participate in a bail-out. The government discussed the bids on Friday with the leaders of the four federal states where Opel has plants.

Hesse Premier Roland Koch, said the states' first choice was Magna, but North Rhine-Westphalia Premier Juergen Ruettgers said he was not happy with Magna's plans.

Final decision lies elsewhere

German politicians, including Chancellor Angela Merkel of the conservative Christian Democrats (CDU), are extremely interested in the fate of the company in the face of national elections being held in September.

Merkel's conservatives, including Economics Minister zu Guttenberg, are keen to preserve Opel jobs but want to limit the state's role in any rescue. The rival Social Democrats (SPD), led by Merkel's challenger, Foreign Minister Frank-Walter Steinmeier, say the government should do all it can to save Opel and have sought to portray Merkel as insensitive to the fate of its workers.

However, the final decision on the future of GM's European subsidiary will be reached by GM and the US government.

GM must present the US government with a viable strategy for its own survival by May 29 and a German delegation is on standby to travel to Washington for negotiations over the weekend.

mrm/dpa/Reuters
Editor: Andreas Illmer