Post Tagged with: "Magna International"

Breaking News: (Update 2) Germany Selects Magna As Partner For Opel

May 29, 2009 at 9:46 pm

(Source: BBC & CNN Money)

Germany has agreed a deal with Magna International, a Canadian-Austrian car parts maker, to take over Opel, part of the European wing of US carmaker GM.

Talks in Berlin continued into early Saturday before Germany’s finance minister announced a deal.

The German government is expected to provide an immediate loan facility of 1.5bn euros ($2.1bn, £1.3bn).

But 2,500 jobs in Germany could be lost and a UK minister has accepted “there is excess capacity” in GM’s operations.

Finance Minister Peer Steinbrueck told journalists outside the chancellery shortly after 0200 local time on Saturday that a deal had been agreed.  Earlier on Friday, Opel and Magna’s reached a preliminary agreement with GM.

“We have an agreement,” said Mr Steinbrueck, the AFP news agency quoted him as saying, following six hours of talks between German politicians, US government officials and executives from GM and Magna.

Magna, teamed with Russian auto maker OAO GAZ Group (GAZA.RS) and state- controlled OAO Sberbank (SBER.RS), has said it will put more than 500m euros ($700m; £435m) into Opel.

Steinbrueck said the parties involved also agreed on the model of a trusteeship for Opel for the interim period.

Speaking after the marathon talks that started Friday afternoon in Berlin, Magna co-Chief Executive Siegfried Wolf said he expects the deal with General Motors to be signed in five weeks.

Wolf confirmed that Magna will provide the short-term cash demand of EUR300 million to Opel, which was one of the key reasons for the German government to delay the decision on state aid earlier this week. He said the funds would be available Tuesday.

Italian auto maker Fiat SpA (FIATY), Magna’s last remaining contender for Opel, skipped the meeting inBerlin, citing a lack of transparency over Opel’s financial condition.

Although the decision on the fate of GM’s European operations eventually rests with the U.S. government and GM itself, Berlin played a key role in the negotiations by providing billions of euros for the bridging finance.

The German government took a deep interest in the sales process as it faces general elections in the fall, and the prospect of seeing thousands of Opel employees losing their jobs made a rescue plan for the traditional car maker a top priority for both parties in Germany’s current grand coalition.

Ruesselsheim-based Opel employs around 25,000 workers. It is part of GM’s European operations that employ more than 50,000, with manufacturing plants in Spain, Poland, Belgium and Britain, where Opel cars are sold under the Vauxhall brand, as well as engine and parts sites such as Aspern, near Vienna.

German Economy Minister Karl-Theodor zu Guttenberg said he arrived at a different risk evaluation, but added he supports the deal and will help to see it completed.

A press conference has been scheduled for Saturday at 8:00 a.m. GMT to explain further details of the Opel deal, Finance Minister Steinbrueck said.

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Breaking News: Opel and Magna Reach Preliminary Agreement with GM; UK’s Vauxhall may be next for Magna

May 29, 2009 at 2:36 pm

(Source: Automobile Magazine & Autoblog & CNN Money)

The Opel affair

General Motors and Canadian auto supplier Magna have reached a preliminary deal regarding GM’s European Opel brand. According to Reuters, the companies have agreed on a plan to allow Magna to invest in the German automaker.

“We have an agreement in principle between GM and Magna,” one source said.  Magna and GM still have details to work out before the two are expected to meet with German Chancellor Angela Merkel. One government spokesman said separately that the meeting had been pushed back until 6:00 p.m. to provide time for the ongoing negotiations. 

While an agreement has been reached between the two parties, the German government – which has agreed to provide financial assistance for Opel – needs to sign off on the matter. Magna and GM have signed a memorandum of understanding that will reportedly help Opel secure some 1.5 billion euros ($2.1B USD) in bridge loans, as well as shore up protections against creditors in the event of a GM bankruptcy.

For its part, Magna will reportedly pour somewhere between 500-700 million euros into Opel, and it plans to cut 10% of the marque’s workforce in Germany – about 2,500 employees.   Interestingly, GM will reportedly hold on to a 35% stake in the brand, while Opel workers themselves will end up with 10% of the company.

The future of Vauxhall?

No word yet on what will happen to Vauxhall, Opel’s UK twin.  But it looks like Magna might also be adding Vauxhall to its portfolio.  According to a  report filed by Dow Jones on CNN Money the U.K. Business Secretary Peter Mandelson said that it is “pretty likely” Canadian car components makerMagna International Inc. (MGA) and General Motors (GM) will become shared owners of U.K.-based carmaker Vauxhall.

Speaking to Sky News and BBC television, Mandelson said he would seek a “very early” further meeting with the parties once the initial talks had been concluded to secure a “cast iron guarantee” on U.K. production and employment.

“I have no doubt that the British government … will be asked to underwrite the deal financially and I have already said that the British government in principle would be prepared to consider that, but that would be linked to production and employment in the U.K.,” he said.

GM’s U.K. unit has two plants manufacturing Vauxhall, Opel (OPL.V), Renault ( RNO.FR), and Nissan (NSANY) models and employs a total of about 5,500 people.

He added Magna’s willingness to contribute bridging finance supported its case. Italian automaker Fiat SpA(F.MI) said earlier it remained interested in Opel but there was nothing more to discuss until GM, the German government and U.S. Treasury had settled their differences.

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