DETROIT — General Motors has delayed until early November a final decision on whether to sell a majority stake in its Opel subsidiary to a Russian consortium backed by Canadian auto parts giant Magna International.
The setback follows the mid-October disclosure that the European Union might hold up the sale to Magna and Russia's state-controlled Sberbank, which was announced by GM in early September and had been expected to close by the end of this month.
Two weeks ago, the EU's tough competition boss, Neelie Kroes, expressed her concern to the German government that Berlin's conditional offer of up to $6.8 billion in state aid — apparently only to the Magna/Sberbank consortium — violated the EU's rules. The reason is that it essentially forced GM to sell Opel to that group despite having received significant offers from several other bidders, including RHJ International, the Belgium-based affiliate of private equity firm Ripplewood Holdings.
GM's chief negotiator, Vice President John Smith, in a blog posting on Friday said the latest developments in the long-brewing Opel sale will be considered by GM's board at its November 3 meeting.
Smith, who heads corporate planning and alliances at GM, said the EU had been "reviewing the Opel investor process and the circumstances surrounding the selection of Magna/Sberbank" and noted that Kroes had "expressed concerns about possible limitations on the availability of government financing for all Opel bidders, and how that may have influenced the selection process."
Berlin subsequently informed GM that its offer of aid was now open to all bidders, not just Magna/Sberbank, according to reports in the European press.
Smith said GM's board still needed to "resolve remaining open points with the Magna/Sberbank proposal—for example, related to labor cost reductions and the government-backed financing package." He said the company was preparing for "the signing of binding agreements should that be authorized by GM's board at the November 3 meeting."
As part of the preliminary deal announced in early September, GM would retain a 35 percent stake in Opel and the European firm's workers would get 10 percent. The remaining 55 percent would be sold to Magna and Sberbank, with the understanding that the Russian bank was partnering with GAZ, the troubled Russian automaker controlled by billionaire oligarch Oleg Deripaska.
GAZ, which is based in Nizhny Novgorod, builds an older version of the Chrysler Sebring sedan called the GAZ Siber as well as a range of light commercial vehicles and is Russia's second largest domestic automaker.
GM also has been concerned about the transfer of technology and intellectual property from Opel to GAZ. Recent media reports have said some members of GM's board favor keeping Opel now that the global auto sales slump appears to be bottoming out.
Inside Line says: As Microsoft and other multinational firms that have encountered the EU anti-competition buzz saw are well aware, Neelie Kroes plays political hardball — and wins more often than she loses. — Paul Lienert, Correspondent
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