Germany says EU concerns don't endanger GM-Magna deal for Opel

ERJ staff report (AN)

Berlin, Germany -- Economy Minister Karl-Theodor zu Guttenberg expressed confidence on Saturday that Germany could address EU concerns about a sale of carmaker Opel to Canada's Magna International Inc., saying they did not put the deal at risk.

The European Commission announced late on Friday that Competition Commissioner Neelie Kroes had written to Guttenberg voicing doubts about Germany's offer to provide 4500 million euros in aid for Opel as part of the deal with Magna.

In the letter, Kroes said there were "significant indications" that Germany had made the aid for Opel contingent on Magna being chosen as the winning bidder -- a stance that would run counter to EU competition rules.

Speaking to reporters in Berlin on Saturday morning, Guttenberg said the deal was "on track" and voiced confidence that Germany could resolve the questions raised by Kroes.

Asked whether her concerns could doom the sale to Magna, he replied: "No, I don't believe that."

Strong Magna support

Magna, an auto parts group whose bid for Opel is backed by Russian investors, had been in competition with private equity firm RHJ International SA and before that with Fiat S.p.A. and China's Beijing Automotive Industry Corp., for control of the General Motors Co. unit.

But the German government stated on numerous occasions during the bidding process that it had a "clear preference" for the Magna bid because it offered Opel the most promising future and would safeguard German jobs.

It linked its offer of 4.5 billion euros in aid for Opel to a Magna takeover, with Chancellor Angela Merkel promising back in August to intervene personally, if necessary, to ensure Magna won the bid battle.

Under pressure from Germany, GM chose Magna as its preferred bidder last month. Under a deal that had been expected to be signed this week but was pushed back amid the EU doubts, GM plans to sell a 55 percent stake in Opel to Magna and Russian state-owned lender Sberbank.

GM would retain a 35 percent stake in Opel under the deal, and workers would hold the remaining 10 percent.

From Automotive News (A Crain publication)