Opel Goes to Magna, Not Fiat

The plot thickens and gets twisted yet again in the ever-evolving saga of GM-Chrysler-(plug whoever you like) auto triage operation. The last I heard, it was Fiat who was pursuing Opel with the intent of combining it with Chrysler to create a super auto company.

Fiat pulled out on Friday over GM's short-term financing needs (300 million Euros), and in comes a consortium led by Magna International Inc., Canada's largest auto parts maker who already has a major presence in Europe.

Deal reached for Magna International to rescue GM's Opel unit: (AP)

"BERLIN - Germany's finance minister announced a high-level meeting in Berlin has approved a plan for Canadian auto parts maker Magna International Inc. to move ahead with a rescue of General Motor Corp's Opel unit.

"Peer Steinbrueck says the agreement was reached early Saturday morning. The agreement will see Opel put under the care of a trustee Saturday.

"The German government will provide a euro1.5 billion (US$2.1 billion) bridge loan which will be available immediately.

"Germany was looking for an agreement that will shield Opel - which employs 25,000 people in Germany, nearly half GM Europe's work force - from a looming GM bankruptcy court filing in the U.S. and extensive restructuring.

"The government wants to make it legally independent under a trustee so that any taxpayer assistance does not go to the U.S., then would provide bridge financing while Opel looks for a new, permanent owner.

"The consortium bid led by Aurora, Ont.-based Magna International includes Russian lender Sberbank."

The reason for the German government to support the Magna deal seems to be job preservation.

"...German Foreign Minister Frank-Walter Steinmeier called it a "responsible solution" that would preserve the highest number of jobs."

Opel employs 25,000 people in Germany, about half of GM's total employees in Europe. Also,

So what exactly is this deal?

German government backs Opel rescue deal (CNN):

Under the deal,

• Magna will own 20% stake in GM Europe that owns Opel brand.
• Russia's Sberbank will own 35% stake.
• GM will retain 35% stake.
• Opel employees will own 10% stake.

What's with the Russian bank? Then I remembered that GM opened a brand-new factory in Russia, one of the fastest growing market for automobiles, just last year. (Read it here.) Magna has been pursuing the Russian market, so far unsuccessfully. The deal will perhaps change that. (Read more about it here.)

Sberbank looks like it represents Russia the country, with a quarter of the Russian banking assets and a third of banking capital (see here).

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