Lazard's "Secret" Report on Opel Bidders: All Three Suitors Suck

The longer the decision over the fate of Opel drags on, the messier it gets. Last week, three parties handed in their bids: Magna, RHJ, BAIC. Later in the week, BAIC was kicked out of the race. Remaining: RHJ, darling of GM, and Magna, darling of everybody else. Then, more facts surfaced. They didn’t endear the bidders to the decision-makers. Not at all.

Over the weekend, Leonhard Fischer, CEO of RHJ told the Frankfurter Allgemeine Zeitung that he is not ruling out selling Opel back to GM—because he can’t. “Let us be pragmatic. It won’t work without General Motors,” Fischer said. Uh oh. Selling GM back to GM doesn’t sit well in Berlin, where the final decision on Opel’s fate will be made. Meanwhile . . .

The Süddeutsche Zeitung, always well informed when it comes to Opel matters, secured a “strictly confidential” report by the Lazard investment bank for the German government, analyzing the federal government’s options. Lazard concludes that none of the three bidders can rescue Opel. Opel is too small to “achieve critical mass necessary for a volume OEM.” In a word: Fuhgeddaboutit.

In fact, Lazard offers the same analysis as dear old TTAC: China’s BAIC offers the most capital and wants the least amount of loan guarantees. Canada/Russia’s Magna wants the most in guarantees and puts the least amount of cash on the table. Private equity firm RHJ is stuck in the middle with flu.

Politically, Magna is the most palatable option. For Lazard’s taste, RHJ is too dependent on GM and their projections are too optimistic. And BAIC would create a lot of jobs—in China.

With the apparently not so confidential but highly toxic paper in circulation, all options are suddenly wide open again. The metal workers union ruminates that RHJ and Magna could possibly join forces. Some politicians in Berlin are using the b-word: Bankruptcy. Allegations are making the rounds that the Lazard investment bank is simply covering the withdrawal of the German government from the Opel mess.

Titillating detail: Lazard, the bank that wrote a near-death-sentence for all three bidders, bred both Tim Collins, owner of RHJ’s parent Ripplewood, and Steven Rattner, the recently departed head of the Presidential Task Force On Autos. What goes around . . .