labels: Fiat, Automobiles - general, Cars
Magna set to bag Opel as Fiat skips talks news
30 May 2009

Although no official announcement has yet come out, analysts believe that the consortium led by Canada's Magna International and Sberbank of Russia will eventually become the new owner with shareholding of 55 per cent in the troubled German brand Opel by the end of the day.

Magana's road to victory become smooth after Italy's Fiat SpA, the only other bidder who was left in the fray after Belgium's RHJ International withdrew from the race on Wednesday, said it would skip crucial talks. (See: Fiat pulls out of Opel talks over funding demands, asserts not withdrawing bid ).

''The global reordering of the auto industry took a big step forward on Friday as an unlikely alliance led by Magna International, a Canadian auto parts maker, and Sberbank of Russia tentatively agreed to buy the European operations of General Motors,'' The New York Times reported on Saturday.

Under the terms of the deal, GM would retain a 35 per cent stake in the new company, with Sberbank, a bank controlled by the Russian government, taking 35 per cent, Magna holding 20 per cent and Opel's employees controlling the remaining 10 per cent.

Based in Ontario, Magna is a Canadian car parts and assembly group that makes vehicles under contract for major carmakers, including Chrysler, Mercedes-Benz, and BMW.

Magna plans to inject between 500 million and 700 million euros into Opel.

Agreeing the deal with Magna, the German authorities said they would provide a bridging loan worth 1.5 billion euros. (See: German officials see Magna's Opel bid superior to Fiat's) .

GM is expected to file for bankruptcy on Monday.

During the bankruptcy, the company will seek to shed burdensome debts; the US and Canadian governments will own 72.5 per cent of the reorganised automaker. In addition, GM will owe the US about $8 billion.

According to Treasury projections, the US could recover most of that investment by 2013,  and the company would reach an equity value of $75 billion in four years.

By putting billions of dollars into the troubled automaker, the Obama administration has placed a huge bet on the effort to revive and streamline the company through the elimination of brands, dealerships and factories.

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Magna set to bag Opel as Fiat skips talks