Magna to Acquire Opel

30 May 2009

BBC. The German government has agreed to Magna International acquiring Opel from GM. The deal was announced early Saturday morning in Berlin by Germany’s finance minister.

The German government is expected to provide an immediate loan facility of 1.5bn euros ($2.1bn, £1.3bn). But 2,500 jobs in Germany could be lost and a UK minister has accepted “there is excess capacity” in GM’s operations.

Finance Minister Peer Steinbrueck told journalists outside the chancellery shortly after 0200 local time on Saturday that a deal had been agreed. “A solution has been found to keep Opel running,” said Mr Steinbrueck, after six hours of talks between German politicians, US government officials and executives from GM and Magna.

Although details of the final deal have not been release, some of the terms reportedly include:

• GM operations in Europe will be placed under the care of a trustee to shield them from GM&rsqou;s anticipated filing for bankruptcy protection early next week.

• Magna, backed by a Russian bank Sberbank and truckmaker Gaz, has said it will put more than €500 million ($700m; £435m) into Opel which employs more than 25,000 people in Germany.

• Before the announcement of the deal Magna said it planned to cut about 10% of Opel’s workforce in that country. Fiat had said it would cut 10,000 jobs.

• GM may keep a 35% stake in the company, while 10% would be owned by Opel employees.