The German government early Saturday said it selected Austrian-Canadian car parts maker Magna International Inc. (MGA) as a partner for General Motors Corp.'s (GM) German Adam Opel GmbH unit, ahead of a likely bankruptcy filing of Opel's parent GM in the U.S.

Speaking after hours of intense negotiations, German Finance Minister Peer Steinbrueck told reporters the German government is well aware of the risks posed by the deal, but nevertheless defended the rescue of the troubled German carmaker as justified.

Germany will provide EUR1.5 billion in bridge financing for Opel, paving the way for a takeover by Magna and its two Russian partners.

Magna has teamed up with Russian auto maker OAO GAZ Group (GAZA.RS) and state-controlled OAO Sberbank (SBER.RS) in its bid for Opel.

Steinbrueck said the EUR1.5 billion bridge financing, which it intended to keep Opel afloat until the details of a takeover by Magna are decided, is the upper limit the German government is willing to provide.

Steinbrueck said the parties involved also agreed on the model of a trusteeship for Opel for the interim period.

Speaking after the marathon talks that started Friday afternoon in Berlin, Magna co-Chief Executive Siegfried Wolf said he expects the deal with General Motors to be signed in five weeks.

Wolf confirmed that Magna will provide the short-term cash demand of EUR300 million to Opel, which was one of the key reasons for the German government to delay the decision on state aid earlier this week. He said the funds would be available Tuesday.

Because of the agreement on the trusteeship and the bridge finance provided by Germany, Wolf said he sees no risk for Opel coming from an eventual GM insolvency.

Wolf said plans for the future shareholder structure of Opel haven't changed, but noted that "some adjustments" might have to be made following the agreement after consulting with its Russian partners.

"Our Russian partners have been very supportive in this deal," Wolf said, adding that Opel stands to "benefit from the significant growth potential of the Russian auto market".

According to previous statements, Magna's consortium plans an initial investment around EUR700 million. Under the plan, which is backed by Opel's works council, GM would retain a 35% stake in the company. Sberbank would take a 35% stake as well, with Magna holding 20% and Opel's employees with 10%.

But some analysts have voiced concerns over the mid- and long-term prospects of the planned tie-up as both Magna and GAZ have been battered by collapsing demand in global auto markets amid the economic downturn.

GAZ is controlled by Basic Element, the investment holding of embattled Russian billionaire Oleg Deripaska. Debt-ridden Deripaska, who also controls aluminum giant UC Rusal, recently lost his 20% stake in Magna to creditors.

Magna itself swung to a loss of $200 million in the first quarter from earnings of $207 million a year earlier as sales tumbled 46% to $3.6 billion amid a large exposure to the ailing Detroit auto makers. GM is Magna's largest customer and Chrysler LLC is its fourth largest.

Italian auto maker Fiat SpA (FIATY), Magna's last remaining contender for Opel, skipped the meeting in Berlin, citing a lack of transparency over Opel's financial condition.

Although the decision on the fate of GM's European operations eventually rests with the U.S. government and GM itself, Berlin played a key role in the negotiations by providing billions of euros for the bridging finance.

The German government took a deep interest in the sales process as it faces general elections in the fall, and the prospect of seeing thousands of Opel employees losing their jobs made a rescue plan for the traditional car maker a top priority for both parties in Germany's current grand coalition.

Ruesselsheim-based Opel employs around 25,000 workers. It is part of GM's European operations that employ more than 50,000, with manufacturing plants in Spain, Poland, Belgium and Britain, where Opel cars are sold under the Vauxhall brand, as well as engine and parts sites such as Aspern, near Vienna.

German Economy Minister Karl-Theodor zu Guttenberg said he arrived at a different risk evaluation, but added he supports the deal and will help to see it completed.

A press conference has been scheduled for Saturday at 8:00 a.m. GMT to explain further details of the Opel deal, Finance Minister Steinbrueck said.

The governor of the German state of Hesse, Roland Koch, said the budget committees of Hesse and the state of North-Rhine Westphalia still need to approve the deal. A decision could be made Sunday, Koch added.

Opel has four plants in Germany, two of which are located in the states of Hesse and North-Rhine Westphalia.

-By Christoph Rauwald and Klaus Brune, Dow Jones Newswires; +49 69 29 725 512; christoph.rauwald@dowjones.com