Clock Ticking for GM Decision on Opel

Tuesday, 16 Mar 2010 01:09 PM

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BERLIN -- Germany raised the pressure on General Motors on Friday to choose a buyer for its Opel unit, with Economy Minister Karl-Theodor zu Guttenberg telling the U.S. carmaker he expected a "fundamental decision" next week.

Speaking on ARD television, Guttenberg said there were offers for Opel which were ready to be signed and that it was time for the U.S. parent to "give in."

Frustration with GM is mounting in the German government, which has come out strongly in favor Canadian auto parts group Magna's bid for Opel.

Sources have told Reuters that some members of the GM board want to keep Opel instead and if that does not work would prefer to sell to Belgian-based financial investor RHJ International. Guttenberg said talks were focused on finding an investor solution for Opel, suggesting Berlin does not expect GM to keep the carmaker.

The government has said it would only provide billions of euros in aid to Opel if GM selects Magna. There are big questions about whether GM could come up with the funds it would need if it decided not to sell its European unit.

The head of GM Europe, Carl-Peter Forster, told Die Welt newspaper in comments released on Thursday that he believed Magna was most likely to win a bidding battle for Opel but that the carmaker could also thrive under the ownership of its U.S. parent.

"The greatest probability would be, for me, Magna, since all prerequisites are fulfilled, the contracts have been negotiated to their conclusion, and the financing is there," he said in Friday's edition of the German paper.

GM sources said Forster, whom Magna has requested to stay on to run Opel should it win the deal, was not speaking for management.

The sources said a group of senior executives, including vice chairmen Bob Lutz and Tom Stephens favor either the RHJ bid or, increasingly, no sale at all.

Opel, which employs about 25,000 people in Germany, has been on the political agenda for months in Europe's largest economy, which holds a federal election on September 27.

In an interview published on Friday, Chancellor Angela Merkel said she still expected Opel to be hived off from GM.

"We have no indication that GM is moving away from an investor-based solution," Merkel told the Westdeutsche Allgemeine Zeitung daily.

Opel's senior labor leader, Klaus Franz, on Thursday told General Motors that his workforce would not pitch in to reduce about $1.2 billion in costs if Detroit retained control of the European unit.

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