Sale to Magna called off as economic climate improves
4 November 2009

General Motors has pulled out of a deal to sell a majority stake in Vauxhall/Opel. The GM board cited "an improving business environment for GM over the past few months" as the reasons for the u-turn.

US sales of General Motors vehicles rose in September for the first time in almost two years, the company recently announced.

Steve Cropley blog: GM keeping Vauxhall is great news

A brief history of MagnaA brief history of GM

The German government had offered GM a £4bn loan on the back of the sale, in which 55 per cent of Opel would have been sold to an alliance of Canadian parts manufacturer Magna and Russian Skerbank, and there are already calls for GM to return to Germany more than £1bn of 'bridge' financing.

The company is now looking for alternative loans from other European governments. There are currently Vauxhall/Opel plants in Germany, Spain, Poland, Belgium and the UK.

The previously agreed takeover by Canadian company Magna had threatened to axe around 10,500 Opel jobs in Europe, 600 of which were due to be lost among the 5,000 British workers in Vauxhall.

GM also said that it aims ‘re-structure’ GME at a cost of £2.7bn and negotiate with the unions on a ‘plan for meaningful contributions to Opel’s restructuring’ – a signal that job losses and even a factory closure are still on the agenda.

“GM will soon present its restructuring plan to Germany and other governments and hopes for its favorable consideration,” said Fritz Henderson, president and CEO.

“We understand the complexity and length of this issue has been draining for all involved. However, from the outset, our goal has been to secure the best long term solution for our customers, employee, suppliers and dealers, which is reflected in the decision reached today.”

“This was deemed to be the most stable and least costly approach for securing Opel/Vauxhall’s long-term future.”

“While strained, the business environment in Europe has improved.” Henderson said. “At the same time, GM’s overall financial health and stability have improved significantly over the past few months, giving us confidence that the European business can be successfully restructured.”

GM’s move was made possible by an EU Commission ruling on 16 October which said there were "significant indications” that the German government had broken EU state aid rules during negotiations to sell off Vauxhall/Opel.

The Commission accused Germany of suggesting that state aid for Opel would only be forthcoming if Magna was the winning bidder.

Twitter - follow autocar.co.ukSee all the latest Vauxhall reviews, news and video

Join the debate

Comments
24

4 November 2009

How enjoyable to hear to all the industry analysts and so-say experts explaining to Radio 4 and World Service listeners now why GM is right to hang on to these European jewels in its crown, having only a couple of months ago appeared on the same programmes to explain the perfect logic of disposing of them to Magna. They really haven't got a clue.

4 November 2009

GM waste everyone's time and money and then announce they hope to get aid from the German government. Instead they are going to get a pay now bill for £1 billion for the bridging loan and probably see the European workers out on strike. GM next in to chapter 11 2011?

4 November 2009

-many so called experts got it wrong (which includes some no necks that post on this forum)

-for those no necks, I am not North (I just thought I would get it in); but did not North say "GM will be fine" (I think he did!!!), North 2, no necks 0.

-GM played a blinder; the German gov. will not ask for the cash back as they are not in the driving seat (no pun intended) and even if they do GM can repay on its own terms!

-also they cannot complain to the EU if other EU countries bid for new GM factories i.e. moved from Germany; GM had perfect moves and something that only comes around once in a life time, Mr. Bob Letz (I salute you); awesome, simply awesome.

-GM go, GM go, well done GM, indeed a master class! I feel honoured to have witnessed it in my lige time; act two now includes Mandy and he will fulfil his words on keeping plants open in the UK; boy are you no necks going to hate that!!

-in fact if we are keeping score, I said yesterday items about BMW, check out the words said by the guy at BMW in the BMW M baby autocar article; CAPSLOCK 1, no necks 0.

-what a great week for people with necks!

4 November 2009

So will Magna show an interest in Volvo now ?

4 November 2009

I just hope GM don't ever have the need to dispose of a division in the future, because the business world will probably never take them seriously again!

Also, surely this must have been approved by the US government who have several fingers in the GM pie at the moment? Wonder how that is going to affect relations with Germany?

 

 

It's all about the twisties........

4 November 2009

-i do not think it will upset the relations with Germany, much of the revenue merc, bmw etc gets is from the US and they will not want to upset the US as it could have serious implications for their perceived flag ship exports.

-plus the US gov has said (or so I seem to remeber) that GM was to be run at arms length from the gov. as it were.

-AM knows it is business at the of the day and she knew when she okayed the cash she might not get it back and ultimately it was towards/support German jobs in the short term.

-it also means things can be (or at least) have the potential to be moved around the EU which (considering) we are now all part of the same after the treaty was signed has to be a good thing.

-it will also be very exciting as GM could get a lot of cash to build new state of the art plants; this means that they will see increase in efficiency etc; they can be tied into solar tech., wind power etc i.e. to have green energy supplied plants and a true EU structure.

-we will see but well played GM!

4 November 2009

This news certainly caught me by surprise. The priority must now be for GM to move as quickly as possible to restructure Opel/Vauxhall. Whether or not GM's decision was a good one I don't know, but this uncertainty and sudden change of plan will not do GM's reputation any favours.

4 November 2009

I think GM has made the right decision, but it has been the lucky recipient of either some considerable incompetence or outright dishonety by the German Govt.

When GM went into Chapter 11 it simply had no option but to sell, as it was cash starved and simply did not have the money to fund Europe. GM Europe was within days of bouncing supplier and pay cheques, hence its need for an immediate bridging loan.

The German Govt hammered out the 'memorandum of understanding' to sell Opel to Magna, as part of releasing the bridging loan (the night time office shots all over the news).

Subsequently, during the 'sale' process the German Govt made it clear that they were working to secure German jobs and that they wanted the Magna deal to go through as the best deal for German workers. Sure enough this patriotic tactic played a key part in getting Angela Merkel re-elected.

But this position was always going to fall foul of EU laws on state aid. Sure enough, when challenged by Spain, Belgium, UK etc the commission made it clear that such an approach was against EU law. Germany was then faced with a catch 22, either (i) admit you broke EU law or (ii) say 'oh no, you misunderstand us, the aid is available to any buyer, and indeed the present owner GM'.

As the largest industrial power in Europe, and key architect of the EU, it could hardly admit to (i) so it said (ii). In saying (ii) it must have been fully aware that this would cause the whole deal to be reconsidered, but by this time AM had been re-elected.

If I was a German tax payer/voter, i would be furious at the moment as it seems there are 2 very obvious alternatives regarding the above:

1. The German Govt offered billions of € to secure German jobs without realising that this was contrary to EU law, meaning it now has to offer that money to everyone including GM who may now in effect be using German money to fire German workers. Surely that level of basic legal incompetence is indefensible.

2. The German Govt knew full well that what it was saying was unlawful and would never go through, but Merkel said it purely to get elected and then once she has been re-elected, she could issue the 'clarification' and walk away from everything she said to the German workers knowing she had a whole new term in office for everyone to forget about it. Basically, she spent billions of taxpayers € on a PR stunt just to get re-elected.

Clearly either option is disastrous for the German Govt. It is my personal opinion that 2 is the most likely and if so it seems politicians are the same the world over. Had the new board members at GM not had the balls to back out of the Magna deal at the 11th hour, despite huge pressure from Germany, the German Govt would have basically got away with it. Well played in that respect GM.

No wonder the German administration is blaming everyone else....

4 November 2009

[quote Gwar]

I think GM has made the right decision, but it has been the lucky recipient of either some considerable incompetence or outright dishonety by the German Govt.

When GM went into Chapter 11 it simply had no option but to sell, as it was cash starved and simply did not have the money to fund Europe. GM Europe was within days of bouncing supplier and pay cheques, hence its need for an immediate bridging loan.

The German Govt hammered out the 'memorandum of understanding' to sell Opel to Magna, as part of releasing the bridging loan (the night time office shots all over the news).

Subsequently, during the 'sale' process the German Govt made it clear that they were working to secure German jobs and that they wanted the Magna deal to go through as the best deal for German workers. Sure enough this patriotic tactic played a key part in getting Angela Merkel re-elected.

But this position was always going to fall foul of EU laws on state aid. Sure enough, when challenged by Spain, Belgium, UK etc the commission made it clear that such an approach was against EU law. Germany was then faced with a catch 22, either (i) admit you broke EU law or (ii) say 'oh no, you misunderstand us, the aid is available to any buyer, and indeed the present owner GM'.

As the largest industrial power in Europe, and key architect of the EU, it could hardly admit to (i) so it said (ii). In saying (ii) it must have been fully aware that this would cause the whole deal to be reconsidered, but by this time AM had been re-elected.

If I was a German tax payer/voter, i would be furious at the moment as it seems there are 2 very obvious alternatives regarding the above:

1. The German Govt offered billions of € to secure German jobs without realising that this was contrary to EU law, meaning it now has to offer that money to everyone including GM who may now in effect be using German money to fire German workers. Surely that level of basic legal incompetence is indefensible.

2. The German Govt knew full well that what it was saying was unlawful and would never go through, but Merkel said it purely to get elected and then once she has been re-elected, she could issue the 'clarification' and walk away from everything she said to the German workers knowing she had a whole new term in office for everyone to forget about it. Basically, she spent billions of taxpayers € on a PR stunt just to get re-elected.

Clearly either option is disastrous for the German Govt. It is my personal opinion that 2 is the most likely and if so it seems politicians are the same the world over. Had the new board members at GM not had the balls to back out of the Magna deal at the 11th hour, despite huge pressure from Germany, the German Govt would have basically got away with it. Well played in that respect GM.

No wonder the German administration is blaming everyone else....

[/quote]

longwinded guff.

[quote Gwar]Basically, she spent billions of taxpayers € on a PR stunt just to get re-elected.[/quote]

In your transparent haste to promote the GM/UK case/vilify the Magna/German side you've over-egged the litany of lies. She, or rather the German taxpayers, has not spent 'billions of taxpayer euros'. Utter garbage. Germany, at a combined federal and state level (the four Opel-concerned states) lent Opel, or legally the Opel Treuhand, €1.5bn, on a bridging finance basis, repayable by Nov. 30th at the latest. This money was due to be repaid regardless of whether Magna got the contract or not. People like you, tossing around blatant lies casually, just harm further the already in the gutter reputation of GM's management and its slavish sycophants in the media and elsewhere.

4 November 2009

To back up what I said ealier

Unions in Germany said workers would begin walk-outs from Thursday in protest at GM's decision.

The German government, which had backed the sale of Opel, demanded GM repayment of a 1.5bn euro ($2.2bn; £1.3bn) loan.

"General Motors' behaviour shows the ugly face of turbo-capitalism," said Juergen Ruettgers, premier of the state of North Rhine-Westphalia . The German government has demanded the immediate re-payment of the German tax payers loans. So not quite the blinder from GM that some of you seem to think.

Pages

Add your comment

Log in or register to post comments

Find an Autocar car review

Driven this week

  • Lexus LC500
    Car review
    20 October 2017
    Futuristic Lexus LC coupé mixes the latest technology with an old-school atmospheric V8
  • Maserati Levante S GranSport
    First Drive
    20 October 2017
    Get ready to trade in your diesels: Maserati’s luxury SUV finally gets the engine it’s always needed
  • Jaguar XF Sportbrake TDV6
    First Drive
    19 October 2017
    The handsome Jaguar XF Sportbrake exhibits all the hallmarks that makes the saloon great, and with the silky smooth diesel V6 makes it a compelling choice
  • Volkswagen T-Roc TDI
    First Drive
    19 October 2017
    Volkswagen's new compact crossover has the looks, the engineering and the build quality to be a resounding success, but not with this diesel engine
  • BMW M550i
    First Drive
    19 October 2017
    The all-paw M550i is a fast, effortless mile-muncher, but there's a reason why it won't be sold in the UK