Breaking: GM Does a 180; Decides to Keep Opel
Two days ago, TTAC’s Bertel Schmitt wrote: “GM may not have to sell Opel after all”. How right he was. In the latest twist on the endless Opel saga, GM’s Board of Directors has canceled the planned sale to Magna and Sberbank. With references to an an improving economy (and an uptick in US sales?) and Opel’s strategic importance to the mothership, CEO Fritz Henderson stated: “GM will soon present its restructuring plan to Germany and other governments and hopes for its favorable consideration. We understand the complexity and length of this issue has been draining for all involved.” Magna had no (repeatable) comment. Former bidder RHJ said in October it was no longer interested.
On a preliminary basis, the GM plan entails total restructuring expenses of about €3 billion, significantly lower than all bids submitted as part of the investor solicitation. GM will work with all European labor unions to develop a plan for meaningful contributions to Opel’s restructuring. While Opel continues to outperform against its viability plan assumptions and immediate liquidity is stable, time is of the essence.
“While strained, the business environment in Europe has improved.” Henderson said. “At the same time, GM’s overall financial health and stability have improved significantly over the past few months, giving us confidence that the European business can be successfully restructured. We are grateful for the hard work of the German and other EU governments in navigating this difficult economic period. We’re also appreciative of the effort put forward by Magna and its partners in Russia in trying to reach an equitable agreement.”
Well, that was a vertigo-inducing ride, [GM].
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