June 5, 2009 / 12:25 PM / 8 years ago

Opel deal in flux, Fiat still interested

3 Min Read

<p>An Opel logo is pictured at the Opel plant in Gliwice, some 350 km (219 miles) south of Warsaw, June 2, 2009.Vasily Fedosenko</p>

TURIN, Italy (Reuters) - Signs emerged on Friday that Canada's Magna could face challenges to its deal for GM's European unit Opel as Fiat SpA said it was still interested and Germany invited rival bidders to improve their offers.

Fiat, the Italian automaker, lost out last week to the Canadian car parts maker Magna in bidding for General Motors Corp's Germany-based Opel and British brand Vauxhall, but Fiat Chief Executive Sergio Marchionne said the deal was not yet sealed.

"The interest is still there, it doesn't depend on us," he told reporters on the margins of a police ceremony in this northwestern city where Fiat is based. "The deal technically is not closed, we will see."

Asked about Fiat's other expansion plans, Marchionne said its interest in GM's Swedish unit Saab was "minimal" without Opel.

Fiat has no talks under way with PSA Peugeot Citroen SA, he said. The French company is often mentioned as a potential Fiat tie-up partner.

Fiat shares were up 0.39 percent at 7.73 euros at 1321 GMT. The DJ Stoxx auto indexwas up 2.34 percent.

Marchionne said Fiat had not yet used a 1.0 billion euro ($1.4 billion) line of credit it had with the banks.

Fiat has said its focus is turning around ailing U.S. car maker Chrysler. Marchionne had seen Opel as key to his goal of putting Fiat in the top ranks of world automakers by output.

Berlin clinched a deal last week with Magna and the U.S. government that includes state-backed loans and loan guarantees worth 4.5 billion euros. The deal aims to shield the company and thousands of jobs from GM's Chapter 11 bankruptcy filing.

Magna and Russian bank Sberbank agreed in principle on May 29 to take a combined 55 percent stake in Opel, with Magna lending 300 million euros to cover short-term needs.

Improved Bids?

Although Magna's plan put it in a strong position, a German government spokesman said it could not be ruled out that other bidders could improve on its offer.

Besides Fiat, China's Beijing Automotive Industry Corp has also shown interest in Opel. It has hired PricewaterhouseCoopers to advise it on a takeover bid, a source familiar with the situation told Reuters on Thursday.

GM Europe Chief Executive Carl-Peter Forster said on Friday he expected a definitive agreement with Magna by July and the deal to close by September.

Writing on a GM Europe web log, he cautioned that although both parties were committed to completing the deal, "much work remains and much could happen along the way."

In an interview with Austria's Format magazine, Magna co- Chief Executive Siegfried Wolf said he would keep Magna and Opel separate in the interest of Magna's other clients.

(Additional reporting by Boris Groendahl in Vienna, Christiaan Hetzner in Frankfurt, Paul Carrel in Berlin; writing by Ian Simpson in Milan; editing by David Holmes and Karen Foster)

$1=.7041 Euro

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