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Vauxhall/Opel sale on rocks
29 May 2009
Fiat could pull out of the race to buy Vauxhall/Opel from General Motors if an initial deal isn’t reached today, before GM enters bankruptcy proceedings on Monday.
Vauxhall could yet become embroiled in the bankruptcy proceedings of parent company General Motors if potential Opel/Vauxhall bidders Fiat and Magna fail to agree a preliminary merger deal with GM and the US government by 1pm today (Friday 29 May).
Fiat has said that it cannot form a complete merger proposal until it has been granted full access to details of Opel/Vauxhall’s financial records. As a result Fiat has said it will not attend a crucial meeting today in Berlin.
“It is in fact unreasonable to expect, on the basis of prudent business judgment and proper governance of its affairs, that Fiat would provide funds to an organization whose financial details and position remain unknown to date,” said Fiat CEO Sergio Marchionne in a statement. “The brevity of time between the request and the date that the commitment must be made is such that proper due diligence cannot be performed.”
The US government have also refused to allow Germany to protect Opel/Vauxhall assets from GM bankruptcy proceedings while a merger deal is worked out
Marchionne stopped short of ruling out a merger between Opel/Vauxhall and Fiat, but warned that the situation was extremely precarious. “We remain committed to finding ways to bridge the expectations of both General Motors and the German government,” he said, “but the emergency nature of the situation cannot put Fiat in a position to take on extravagant risks.”
Separately, rival bidder Canadian parts giant Magna is said to be growing increasingly frustrated with constant new demands from GM.
Matt Rigby
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