GM to keep European Opel unit
Restructuring is seen as cheaper
DETROIT - General Motors Co. said yesterday it will keep its European Opel unit and restructure it instead of selling a 55 percent stake to Canadian auto parts maker Magna International and its partner, Russian lender Sberbank.
GM’s board of directors made the decision at a daylong meeting after determining that a $4.43 billion restructuring plan was significantly lower than what GM would have had to contribute to other bidders for the division. GM chief executive Fritz Henderson added that Europe’s business environment and GM’s overall health have both improved since it put the division up for sale.
The decision ends a year of uncertainty for the troubled Opel brand and its English sister, Vauxhall. Henderson said in a statement that GM will present its restructuring plan to the German government soon.
In a brief statement, Magna cochief executive Siegfried Wolf said his company would continue to support Opel and GM in the future.
“We understand that the board concluded that it was in GM’s best interests to retain Opel, which plays an important role within GM’s global organization,’’ he said.
The move came even though Opel’s unions yesterday reached agreement with Magna for $390 million a year in cost cuts. Henderson said it will work with Europe’s unions “to develop a plan for meaningful contributions to Opel’s restructuring.’’
GM, which has lost more than $80 billion in the last four years and has received about $50 billion in aid from the US government, had said it plans to sell Opel to focus on more profitable regions, including Latin America and Asia.
But the potential sale had been fraught with complications. In August, GM rejected a deal to sell Opel to Magna because it preferred Brussels-based investor RHJ International SA.
The offer from RHJ International required less government aid but appeared likely to involve more job cuts in Germany, something the German government had been keen to avoid as it headed into elections in September.
After Germany agreed to provide some $6.6 billion in financial aid for the Magna deal in September, GM said it would sell Opel to the Magna consortium. But the deal was still set to face European Union scrutiny.
Last month, the EU set a deadline for Nov. 27 to decide whether the Magna and Sberbank takeover could cause competition problems. The EU also was considering examining German government subsidies to Opel.
Other concerns remain. Workers have said they would rescind the pay concessions revealed Monday if there is any outcome besides a deal with Magna. That could leave GM at significant financial risk. Magna had said it planned to cut about 10,500 Opel jobs in Europe, with 4,500 in Germany, but it would keep four German plants open.