Opel: Going Nowhere, Slow

Pundits across the spectrum are still aflutter over the alleged final-honestly-we-mean-it-this-time-it’s-for-real-fer-sure sale of Opel to Magna and their Russian Sberbankers. Along with the geopolitical impact thereof. What they all miss: The deal may not go down. Especially not after GM laid down some outrageous “conditions” for the sale . . .

STRATFOR [sub] the not-so-poor man’s CIA, already sees the deal as a prelude to the sequel to the Molotov-Ribbentrop Pact, and threatens: “With Germany reasserting its independence and growing economically and politically closer to Russia, STRATFOR will keep a close eye on the developing U.S.-German relationship in Merkel’s second term.” Angela may dislike Obama, Stratfor muses, and cozy up to Vladimir, because “it will not escape her scrutiny that the U.S. government, which owns post-bailout GM, did not make any real effort to help her so close to the vote, and that the issue dragged on until two weeks before elections.

Then there are totally opposite rumors that just won’t die either: Obama, so the rumor goes, handed “Dear Angela” a (however hollow and highly conditional) victory to keep her in power, and to spoil a possible commie-coalition between Social Democrats, Die Linke (an assortment of old East German communist who have teamed up with the unemployed and impoverished) and the always left-leaning Green party.

It’s all bunk.

After TTAC has said it for months, Manfred Güllner, chief of the opinion research center Forsa told Der Spiegel: “I doubt that this will have a noteworthy influence [on the elections].” He sees most of the voting populace to be against bailouts anyway. Other pollsters agree: “Opel is not a topic for the elections,” said Andrea Wolf of Forschungsgruppe Wahlen.

With that out of the way, GM is back to its old tricks.

One day after the Opel/Magna decision had been announced, GM unleashed its first wave of the feared “conditions.” For a lack of chutzpa you can blame them not. Now GM wants a buy-back clause, a right of first refusal in case one of the investors (Magna or Sberbank) wants to get out, Der Spiegel writes. Amazingly adroit! Everybody knows that Sberbank doesn’t want to hold on to its shares longer than absolutely necessary, they want to sell them to GAZ , or maybe a yet to be founded Russian Leyland. With the clause, GM could grab the shares (if they can afford them).

What’s more, 35 percent owner GM demands half of the executive board seats on the eight person Opel board. For the next three years, at least. Oh, and GM wants the portfolios for “Marketing/Sales” and “Research & Development.” They graciously allow Magna to nominate the CEO and three others. With the executive board of Opel split 50:50 between lions and Christians, anything could happen at Opel, except cars. People had their doubts whether Opel will be viable. With this setup, nothing will happen, except murder in the executive dining room.

That’s just for starters. Who knows what else they will come up with.

(The longer I watch this, the more I believe that GM is already owned by China. The hurry up and wait, the sudden outlandish demands, the 540 degree pirouettes during negotiations, the insulting behavior, all that is straight out of Chinese Business Negotiations for Dummies. Except that GM is dealing with hard-derriered Germans who will have lost every bit of compunction after the elections.)

If GM won’t manage to suffocate the deal, then Brussels will. AP reports that “the European Union’s competition commissioner has warned she will take action if there is proof of any protectionism in the sale of General Motors Co.’s European unit Opel.” The Belgian government has lodged a complaint. They want their Antwerp plant to be kept open. But they haven’t put anything in the till.

Spain (Opel has a plant in Zaragosa) and the UK (Vauxhall has 5,500 workers in Luton and Ellesmere Port) are most likely next in line. And they are right. As the European Commission points out, “state aid cannot be subject to additional non-commercial conditions concerning the location of investments and/or the geographic distribution of restructuring measures.”

Once matters move to Brussels, they come to a crawl. Whoever wins the German elections has all the time they want to dispose of Opel. If it goes kaput, they can blame the Americans and Brussels. And the conspiracy theorists of all stripes can muse about “who killed Opel?”

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  • Tricky Dicky Tricky Dicky on Sep 14, 2009

    Is it too crass to suggest that the Germans have torpedoed GM's status as a global player and have now sunk them down to 'Regional Player' instead? Yeah, bad imagery. My bad. I think the conspiracy theories are too fanciful, and they always imply that someone has a much greater level of control or foresight than they really have. I prefer to think of most gov'ts and corporations as amateur bumblers, making things up as they go along. It's easier to believe. GM saw the report from KPMG revising the real cost of keeping Opel viable. It has gone up by €1.1B to €6.1B since June. Ouch, that's inflationary. They knew they didn't have the cash to do the job. At the same time, the German Gov't probably threatened to liquidate Opel once the €1.5B bridging loan term expires in November. This gave GM a stark choice. Wait to lose control of Opel in November for zero cash and let a German court sell it to Opel. OR, give up now, get a 35% stake in a company with no cash down and pretend you are still friends with the German people. So they did the best they could and insisted on a bunch of conditions, just to make sure everyone was really p_ssed with them. They cleverly managed to negotiate themselves SECOND right of refusal for Opel shares sold. Clearly Sberbank will get it's way and sell out to GAZ (once Deripaska can get his hands on more liquidity). What's interesting for me, is the German gov't bailout, and the Magna cash, and the Sberbak loans for equity, are STILL €1.1B short of the money that KPMG say is needed to make Opel a going concern. It seems to me that there's every chance that Opel's dream of freedom can still turn into a nightmare.

  • Stingray Stingray on Sep 15, 2009
    The longer I watch this, the more I believe that GM is already owned by China. The hurry up and wait, the sudden outlandish demands, the 540 degree pirouettes during negotiations, the insulting behavior, all that is straight out of Chinese Business Negotiations for Dummies This behavior must belong to all new "industrialised" countries. Save for the insulting behavior (they're polite), I can change Chinese for Iranian with no problems. I guess how "technological transfer" from the chinese would work....

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