By on July 16, 2009

Want to handicap the bidding war for Opel (and German bailout money)? Then be careful in your choice of news sources.

Germany’s mass-market tabloid BILD today declares that “RHJ is in the lead” for Opel. Magna has only “slim chances” to win. BILD‘s supposed sources are in Berlin’s Ministry of Economics.

Also today, the Wall Street Journal writes: “Germany’s government sent a message to General Motors Co. on Wednesday: If GM sells its European car business to anyone other than Magna International Inc., then Germany might withdraw its offer of state aid.”

Wie bitte?

According to Reuters, Germany’s government has issues with BILD. “The report is wrong,” Jochen Homann, head of the government’s Opel Task Force, told Reuters. “A decision has not been taken in favor of one or the other bidder.”

The WSJ may be closer to the truth. Homann ominously added that the €1.5 billion in bridge financing is not linked to one bidder. But “future government guarantees would have to be negotiated.”

While Homan remained diplomatic, Roland Koch, premier of Opel’s home state Hesse, didn’t mince words: “The public guarantee negotiated with Magna does not automatically apply to the financial investor RHJ,” Koch said to Germany’s Handelsblatt. Yesterday, a speaker of Berlin’s government said that the total of €4.5 billion in aid has only be committed to Magna. “If another bidder is chosen, then the offered aid has to be reviewed.” So there goes the plan of GM to use RHJ as a strawman, collect government money, and then buy back Opel.

Says the WSJ: “A newly confident GM, emerging faster than expected Friday from bankruptcy proceedings, is growing cool on Magna after failing for weeks to bridge differences with Magna over issues including access to GM technology and world markets. GM’s preliminary, nonbinding accord with Magna in late May was “a shotgun wedding” under political pressure from Germany, said one person close to GM.”

GM doesn’t want Magna anymore, favors RHJ. To the RHJ bid, Berlin says: “you go ahead, but forget about the money.” Maybe they’ll split the baby and settle on China’s BAIC? Officially, they are still in the running. BAIC is “offering more cash and seeking less government aid than other bidders,” says the WSJ. But BAIC wants to truck Opel technology off to China.

So who’s on first?

Update: According to Der Spiegel, all states where Opel has plants shot down the RHJ offer. Kurt Beck, Premier of Rhineland-Palatinate: “Impertinence.” Jürgen Reinholz, Economic Minister of Thuringia: “Unacceptable.” All quiet at the eastern front: Nobody heard from BAIC.

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9 Comments on “Opel Watch: Who’s on First?...”


  • avatar
    menno

    No, “Who’s on first”.

    It’s all musical chairs until someone gets hurt.

    Opel is toast.

  • avatar
    PeteMoran

    Are they arguing about an Opel Division with positive cashflow/assets or is it debt-ridden and losing money?

    If any suitor sees potential doesn’t that imply a “value” and why was that not tested before bankruptcy, or why is it not now owned by “old GM” to recover more of those shafted lenders investments?

    What was the ownership construct that allows “New GM” to be in control of Opel?

  • avatar

    Pete: It’s trickier than that. 35% of Opel are owned by GM. Whether it’s the old or the new I don’t know, someone look it up.

    The other 65% are “in trust” – to securitize the €1.5b government bridge loan. Even without that, Berlin would call the shots, because they are the only ones who will come up with the further billions any bidder needs.

    So they are going through the motions: The official “owner” (GM) picks a suitor. But then that suitor has to pass the Berlin sniff test. If they don’t like him, no loan guarantees.

    My private prediction is similar to menno: This will go on until after the elections. And then Opel will be toast. Or sold off cheap to China to recoup the 1.5b

    Whether Opel is in the reds or the blacks is also hard to say. You don’t want to have high profits in high tax Germany. Probably one of the reasons for the “patents/license fee” – which can be used as a tax dodge. There are persistent stories of unpaid bills (wouldn’t surprise me if they are from the Bad GM…)

    Opel is doing ok in Europe (see June data) especially considering that people aren’t sure whether they will still be around. Opel is doing better than BMW or Daimler.

  • avatar
    Hippo

    Better toast then transfer German taxpayer money to GM.

    GM is bluffing, they need access to Opel technology and engineering. No one really needs GM.

    They already are leeching off the American taxpayer.

  • avatar
    akear

    It is so sad that GM cannot engineer and design its own cars anymore. Wagoner and Putz really destroyed GM’s ability to design and engineer vehicles in Michigan.

    Whay can’t putz just go. Hasn’t he done enough damage.

  • avatar
    Andy D

    I dont give a rodent’s rear end about what happens to Opel. But thankyou for my favorite Abbott and Costello routine

  • avatar
    charly

    A large part of a car companies budget is R&D. Kill that and Opel will make money, for a decade or so.

    25000 people work directly for Opel Germany. That a €60000.- loan per employee. Normally governments pay (not loan) much more per worker to get business to settle somewhere.

    The question is not if the German government will support the Opel factory. They will, the money needed is just to small in comparison with the number of workers. The question is will they support GM Europe or will they do a “ch11″ with Opel and new owners. I think it is clear that they want GM out so that is not really a question. Now the question is who will buy Opel?
    In my view takeover by the Russians is the best solution for a whole host of reasons.(Russian labour is cheap but not that cheap, Opel will be big in Europe and Russia so Russia will keep car regulation close to European rules, Opel is big in Europe so they can’t close the market for European made cars, same suppliers etc.)
    The added bonus of the Canadian car company Magna is that Canada will be moved to European rules.

    There are naturally other options. Closing (can not be done because Opel is profitable without R&D) Selling it to a European Car company (who, FIAT is broke, Renault/VW to much overlap, Peugeot needs to sell cars outside Europe, BMW a possibility but don’t seem to want to)
    Selling it to the Chinese (and see China sell large number of cars in 5 years instead of 10 years in Europe) Selling it to a private equity firm (and see them flip it to Russia or the Chinese)

  • avatar
    charly

    Andy, if Opel is allowed to sell Opels in America than GM gets an extra competitor instantly. Opel doesn’t need to recouper the R&D in cars they sell in America as they never plan to sell there so they can do it cheaper. Their forte is in selling cheap big (for Europe) cars. It is true that GM isn’t strong in cars but this would hurt especially as GM’s dealer network doesn’t need training to service them.

  • avatar
    paris-dakar

    This made me laugh:

    A newly confident GM, emerging faster than expected Friday from bankruptcy proceedings, is growing cool on Magna after failing for weeks to bridge differences with Magna over issues including access to GM technology and world markets.

    ‘Newly confident’. GM is the industrial equivalent of a mouthy panhandler.


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