By on July 23, 2009

No big surprises in the excruciatingly slow bidding for who will finally take over Opel with the blessing and money of the German government. AFP reports that China’s BAIC has been kicked out of the sluggish race. The field of suitors has been whittled down to Magna and RHJ.

Officially, the race is open and fair. However, it is an open secret that GM favors RHJ, while the German government roots for Magna. GM hopes to be able to buy back a washed, rinsed, and refinanced Opel from a compliant RHJ. Berlin hopes to build a Ribbentropian German/Russian automotive power pact. Says AFP:

“While the final decision lies with GM, the German government is involved as it is set to stump up billions of euros in loan guarantees to sweeten any takeover deal in a bid to save tens of thousands of jobs.” Nothing will be decided without Berlin’s say-so.

A spokesman for Chancellor Angela Merkel said on Wednesday that Berlin’s preference for the Magna proposal—backed by Kremlin-controlled Russian bank Sberbank—was unchanged following an initial examination of the bids. The deal cannot go ahead without Berlin clearing the billions of Euros of loans and guarantees for its preferred candidate, the spokesman added, just in case people weren’t listening.

On paper, the one who puts in the worst bid wins.

BAIC had offered the most capital and wanted the least amount of loan guarantees. BAIC offered €660 million for a 51 percent stake and wanted only €2.6 billion in German government guarantees. To good for government work: BAIC is out.

RHJ is seeking €3.8 billion in state guarantees and would buy a 50.1 percent stake for €275 million.

Magna wants €4.5 billion in state guarantees and offers to invest up to €700 million together with Sberbank.

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10 Comments on “Opel Won’t Be Chinese...”


  • avatar
    psarhjinian

    BAIC had offered the most capital and wanted the least amount of loan guarantees

    Yes, and they probably would have ripped Opel out of Europe and would never, ever have handed it back to GM. That neither side sees much long-term future in BAIC’s offer is unsurprising.

    RHJ is seeking €3.8b in state guarantees than Magna and would buy a 50.1 percent stake for €275m.

    Magna wants €4.5b in state guarantees and offers to invest up to €700m together with Sberbank.

    Magna would keep Opel local, RHJ, well, I have no idea why they’re in this, especially if they honour GM’s “We’ll take Opel back after you’ve done all the hard work” clause. All I can see them doing is selling off whatever they can get money for and gutting the rest. What GM gets handed back won’t be worth much.

    On that note, I can’t believe GM has the gumption to require a buyer to hand Opel back when all is said and done. Actually, no, wait, I do believe it; it wouldn’t surprise me in the least to know that they’re still that arrogant and self-important.

  • avatar
    Hippo

    RHJ is a collection of Wall Street pigs trying to steal German taxpayer money.

    Better to close Opel and use the money for workers pension then to give even one Pfennig to these mofo’s.

  • avatar

    Hippo: No more Pfennigs … Cents ….

  • avatar
    charly

    The bids are more complex than this so you simple can’t say that Magna is the worst offer. Besides you shouldn’t look at the offer alone but also what this will mean in the future.

  • avatar
    rnc

    Actually using said money and funding pensions, unemployement and job traning while freeing up 9.1% of european automarket for others would be brilliant.

    Same would have been said about Crysler’s 10% US share.

    Didn’t happen, won’t happen.

    Or perhaps they are trying to stretch this out long enough until GM is out of bankruptcy (fully)and refinanced and all of a sudden decides we don’t need to sell opel after all. I believe that was just a pre-BK condition for GM, post BK that no longer exist?

  • avatar
    TireGuy

    What is interesting is that the two Germans in the kind of “supervisory board” to the trusteeship both seem to tend not to go with Magna.

    The liberal democrat Mr. Dirk Pfeil supposedly is still for running Opel through a kind of reorganization insolvency (although the German law is much more unfavourable than Chapter 11).

    Interestingly Manfred Wennemer is favouring RHJ. Wennemer, whom I know well, has never been afraid of private equity. He was CEO of Continental Tyres until that was taken over by an unfriendly bid last year. He knows many details about the automotive industry, and therefore his opinion could seriously have an impact on the final decision.

  • avatar
    superbadd75

    What I don’t understand (still) is how the sale of Opel affects GM’s future (Opel-based) products, and who owns the technology and rights to the platforms they use? Also, assuming that they get Opel, does Magna have any plans for them to play in the U.S. market?

  • avatar
    charly

    @rnc: Europe doesn’t think that European. It is 10% of the market but the companies who will get most of that 10% are Renault, Peugeot, Citroen, Ford, Volvo and the Japanese. Those are not German companies with German Factories.

    Pfeil wants to cut Opel completely from GM. I think a slow dissolvency of the partnership is better for both sides.

    RHJ is the Atlantic choice. But that side wanted to fight the Iraqi war, which they predictable subsequently lost. Also America is blamed for the crisis.

    @Superbadd: GM has plans to not allow Magna to have plans in the North American Market. Don’t forget that Magna is Canadian and assembles cars in Canada. The added bonus of a Magna take over is that Canadian regulation may be easier persuaded to follow the European way instead of the American way

  • avatar
    th009

    charly: It is 10% of the market but the companies who will get most of that 10% are Renault, Peugeot, Citroen, Ford, Volvo and the Japanese.

    Volvo picking up Opel’s market share? Surely you jest, as their sales are shriveling away with or without Opel.

    In any case, so far this year it appears that VW has been the biggest beneficiary of the Opel sales collapse in Europe. Of course the new Polo has played a big part in this (given the scrapping incentives), but as the European market leader you will have to assume that they would take a significant share of any space vacated by Opel in any case.

  • avatar
    charly

    Opel forte is large non luxury cars. Volvo forte is large near luxury cars. If Volvo lowers its price it is in Opel territory.

    Opel sales collapsed because the sales of the type of cars they are strong in collapsed, not because of fears that they will disappear.

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