General Motors Weighs Options for Opel Unit Amid Crisis

Strategic Insights -

The new General Motors board is deliberating over four options for its German-based Opel unit, including preserving the operation or allowing it to enter bankruptcy protection, a person familiar with the options revealed on Wednesday. The 13-member board, meeting in Detroit, is also considering bids from a consortium of Canada's Magna International Inc. and Russia's Sberbank, as well as a competing offer from RHJ International. Opel, which also includes brands such as Britain's Vauxhall, was transferred to a government-backed trust ahead of parent GM's bankruptcy, with the trust holding 65% and GM holding 35%. The fate of Opel is of significant concern, with GM seeking to prevent its car designs and technology from being accessed by companies that compete against its Chevrolet brand in Russia and other parts of the world.

Key Takeaways:

  • The General Motors board is considering four options for its Opel unit, including keeping the operation or allowing it to enter bankruptcy protection.
  • The 13-member board is weighing bids from a consortium of Canada's Magna International Inc. and Russia's Sberbank, as well as a competing offer from RHJ International.
  • Opel employs 25,000 people in Germany, approximately half of GM Europe's total workforce.
  • German government officials have expressed support for the Magna-Sberbank bid due to its potential to preserve jobs in a critical election year.
  • The RHJ bid is preferred by GM due to its likelihood of restructuring Opel while preventing the transfer of GM's car designs and technology.
  • The outcome of the decision will have significant implications for the German government, with officials offering 4.5 billion euro ($6.5 billion US) in credit to support the Magna bid.
  • The trust holding Opel has 65% ownership, with General Motors holding 35%.

Statistics:

  • 25,000: The number of people employed by Opel in Germany.
  • 65%: The percentage of ownership held by the trust overseeing Opel.
  • 35%: The percentage of ownership held by General Motors.
  • 4.5 billion euro ($6.5 billion US): The amount of credit offered by the German government to support the Magna bid.

Sources:

  • The Associated Press, citing a person familiar with the options.
  • "Magna International Inc.", TSX: MG. A
  • "RHJ International"
  • German government officials, citing the German government's offer of 4.5 billion euro in credit to support the Magna bid