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.
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.