June 3, 2009 / 10:28 AM / 8 years ago

Magna sees Opel deal in September, Berlin cautious

4 Min Read

<p>Magna co-Chief Executive Siegfried Wolf (R) and GM Europe President Carl-Peter Forster attend a news conference after talks in the headquarters of German car manufacturer Opel in Ruesselsheim June 3, 2009.Johannes Eisele</p>

BERLIN/RUESSELSHEIM, Germany (Reuters) - Canadian car parts group Magna International Inc said on Wednesday it expects to complete a takeover of Opel in September, but the German government made clear the door remains open to rival bidders.

Berlin agreed on Saturday to provide 1.5 billion euros ($2.14 billion) in bridge financing to Opel as part of a deal to shield the company from U.S. parent General Motors Corp's Chapter 11 bankruptcy filing.

The basis for providing the funds was a preliminary deal between Magna and GM, but Germany has stressed so far that other bidders, including Italy's Fiat SpA and China's BAIC, still would have a shot if they improved their bids.

"The process is still open to all the bidders," government spokesman Ulrich Wilhelm told reporters in Berlin.

A German official told Reuters that BAIC representatives had met with government members and made clear they would "seriously consider" a more detailed bid if talks with Magna failed.

The government has an interest in keeping up the pressure on Magna until a deal is closed that satisfies Berlin's demands.

But Magna is the clear favorite to do a deal, particularly as its main rival bidder, Fiat, has said it was focusing on reviving Chrysler LLC.

After being criticized for doing nothing to help Fiat's bid, Italian Prime Minister Silvio Berlusconi said on Wednesday his government would be willing to intervene with Germany to support another Fiat bid if the automaker wanted.

Closing in September

Magna co-Chief Executive Siegfried Wolf met Opel workers in the car maker's Ruesselsheim headquarters on Wednesday and vowed to seal a deal quickly.

"We think that we will be finished in the next four, five weeks and then there's the final signing," he said. "After the signing, all approvals have to be given, and I think that we can expect a closing in September, end-September."

After Magna and Russia's Sberbank agreed in principle on Friday with GM to take a combined 55 percent stake in Opel, European governments have been lining up a total of 4.5 billion euros in loan guarantees.

In Germany, a state bailout so close to federal elections on September 27 has become politically charged as a raft of German companies seek government support and try to cut staffing costs amid the global economic crisis.

German Vice-Chancellor Frank-Walter Steinmeier has said Magna could cut some 10,000 jobs at Opel. GM Europe had previously said Opel's staff costs needed to be reduced by $1.2 billion to return the car maker to profitability by 2011.

Negotiations over the future of sites in Britain's Luton and Belgium's Antwerp would be "a hard nut," senior Opel labor leader Klaus Franz said, adding it was unclear at this point whether unions would succeed in keeping these plants open.

Many details still have to be worked out between Magna and GM, such as whether Opel cars could be sold globally in five years' time or if the new entity would be a German or European (SE) stock corporation.

Even the ultimate shareholder structure might not yet be finalized, Franz added, explaining that a full evaluation would reveal whether GM would retain 35 percent of Opel or if the workforce would gain more than the planned 10 percent at the U.S. car maker's expense.

($1=.6999 Euro)

Additional reporting by Francesca Piscioneri in Rome, editing by Gerald E. McCormick

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