Magna Hopes To Clinch Opel Deal As Rivals Gear Up
13 Juli 2009 - 7:06PM
Dow Jones News
Magna International Inc. (MGA) remains confident it will clinch
the acquisition of General Motors Corp.'s (GMGMQ) core European
unit, even as two rival bidders are gearing up efforts to grab Adam
Opel GmbH for themselves.
Magna still is optimistic it will sign a deal with GM in the
coming days, a person familiar with the matter told Dow Jones
Monday.
But the person added that a Magna supervisory board meeting
planned for July 14 has been postponed as several critical aspects
of the transaction - such as intellectual property issues and
access to growth markets - remained unresolved.
Canadian auto-parts manufacturer Magna emerged as front runner
to buy Opel and its British brand Vauxhall after it signed in May a
non-exclusive memorandum of understanding to acquire a majority
stake as part of a bid backed by Russia's Sberbank Rossia (SBER.RS)
and automaker OAO GAZ Group (GAZA.RS).
The bid is bolstered by EUR1.5 billion in bridge financing
provided by the German government to keep Opel afloat as GM filed
for bankruptcy in the U.S. Opel's powerful labor unions have voiced
their support for Magna's offer.
But in recent weeks, RHJ International SA (RHJI.BT) and Beijing
Automotive Industry Holding Co. Ltd. boosted their efforts to catch
up with offers that would require lower government financing
guarantees than Magna.
GM signed the tentative agreement with Magna but expects to put
"two or three fully-formed proposals" to the trust overseeing the
European operations and the U.S. auto task force, according to a
person familiar with the company's plans. GM Europe is not expected
to name a preferred bidder ahead of the decision, the person
said.
RHJ, a Belgium-based investment group, Monday announced in a
statement that talks with GM were at an "advanced stage," but
didn't offer further details.
While speculation has circulated that RHJ's chances may be
better than initially thought, the company earlier this month
reported a EUR1 billion net loss for the year ended March 31 that
cast doubt on its financial clout.
But RHJ claims that it has the financial muscle for the deal.
"We have a large cash position," said Arnaud Denis, a spokesman for
RHJ in Brussels.
Last week, China's BAIC detailed its interest Opel - it wants to
get its hands on the U.S. automaker's technologies, including
alternative drive trains.
BAIC said in a document outlining its offer that access to GM's
advanced technology was the "key driver" for its bid. According to
the document, GM would have to "license all alternative propulsion
technologies (i.e. hybrid, fuel cells)" to Opel, including the new
company's planned Chinese operations.
BAIC plans to invest $2.25 billion in Opel in China to ramp up
production there by 2015. The document, which was reviewed by Dow
Jones, is addressed to GM, dated July 2 and signed by BAIC Chairman
Heyi Xu. BAIC is offering EUR660 million in equity for a 51% stake
in Opel, with GM retaining a 49% stake.
But BAIC's offer is raising concerns about technology transfer.
According to an internal document from the German economics
ministry seen by Dow Jones Monday, Opel could become too reliant on
the Chinese government if BAIC gets the nod to take over the
company.
The document, dated July 3, said a new Opel could get into a
"difficult dependency" on Beijing if government-owned BAIC
succeeded.
Company Web site: www.opel.de
-By Christoph Rauwald, Dow Jones Newswires; +49 69 29 725 512;
christoph.rauwald@dowjones.com
(Katharina Becker, Andrea Thomas, Alessandro Torello, Doug
Cameron and Adam Cohen contributed to this report.)