UPDATE: German State Secretary: Magna Front Runner For Opel
03 Juli 2009 - 10:42AM
Dow Jones News
German State Secretary Jochen Homann said Friday that Magna
International Inc. (MGA) is the front runner to take over General
Motors Corp.'s (GM) Adam Opel GmbH unit, but noted that the U.S.
parent company still has to make the final decision on a deal.
"GM is negotiating with the bidders, not the (German)
government," Homann added, at an industry conference in Munich.
Homann said a viable plan has to be found for Opel in order to
justify financial support from the state, and that the auto
industry still faces the problem of "significant over
capacity."
"It doesn't matter if its 20%, 30% or 40% (over capacity). It's
a structural problem," Homann said.
In May, GM signed a memorandum of understanding to sell a
majority stake in Opel and its U.K. sister brand Vauxhall to Magna,
whose bid is backed by Russia's Sberbank Rossia (SBER.RS) and auto
maker OAO GAZ Group. The agreement isn't exclusive or binding,
although Opel's powerful labor unions have already voiced support
for Magna.
The tentative agreement with Magna is backed by EUR1.5 billion
in bridge financing provided by the German government to keep Opel
afloat as parent GM filed for bankruptcy protection in the U.S.
China's Beijing Automotive Industry Holding and Belgium-based
private equity firm RHJ International SA (RHJI.BT) have also
launched bids for Opel.
Company Web site: www.opel.de
-By Christoph Rauwald, Dow Jones Newswires; +49 69 29 725 512;
christoph.rauwald@dowjones.com