Opel Magna deal in trouble
14 Sep 2009
General Motors' (GM) deal with the Canadian-Russian consortium Magna-Sberbank over the latter acquiring a controlling 55-per cent stake in GM's German unit Opel is running into trouble on many fronts.
GM has chosen the Canadian-Russian Consortium over rival company RHJ, a Belgian financial investor, mainly because German Chancellor Angela Merkel is said to be supporting Magna's bid and has promised financial aid if GM went ahead with the deal. (See: German chancellor blames GM for Opel sale delay)
Incidentally Merkel is facing an election on 27 September and the deal is being viewed by many as politically motivated more than an economic one.
Merkel has promised to provide finance to the tune of 4.5 billion euros ($6.57 billion) in state guarantees to GM as the deal may help preserve jobs in Germany, where half of Opel's workforce is based.
Under the deal, Magna and Sberbank would acquire a 55-percent stake in Opel and the smaller UK-based company Vauxhall. GM, the current owner of Opel would own a 35per cent stake, while Opel's employees would be given 10 per cent.
Criticism is now growing on the terms of the deal with trade unions saying more jobs would be cut than expected earlier.
