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GM will sign a deal on Thursday to sell Opel to Magna

13 October 2009 No Comment

GM will sign a deal on Thursday to sell a majority stake in Opel to a group led by Magna International Inc., German news agencies reported, citing sources close to the negotiations.

GM agreed on September 10 to sell 55 percent of Opel to Canadian supplier Magna and its Russian partner Sberbank, but the deal stumbled amid labor union demands for a veto on factory closures and concern in the UK and Spain that 4.5 billion euros ($6.7 billion) in aid pledged by the German government for restructuring Opel favored the carmaker’s German factories.

GM CEO Fritz Henderson said on Tuesday it was possible that a deal on the sale of Opel could come this week. Henderson was speaking during a visit to Shanghai.

Under the agreement, GM will retain a 35 percent stake in the carmaker, based in Ruesselsheim near Frankfurt. Employees will receive a 10 percent stake in Opel in return for 1.2 billion euros in concessions.

Russia push

Opel plans to cut 10,500 of the 50,000 jobs in its plants across Europe, half of which are in Germany with big workforces also in Belgium, Britain and Spain.

Magna and Sberbank, Russia’s biggest commercial bank, have promised to inject 500 million euros into Opel, which they want to use to make an aggressive push into the Russian market.

They have committed to keeping German plants running, but Opel’s Antwerp plant in Belgium and the British site of sister brand Vauxhall in Luton are seen at risk.

Opel labor leader Klaus Franz said on Monday that he expected GM to sign the contract this week. “We are on the home stretch but there a few more points to clear up,” Franz said.

Progress in the U.K.

The British government said on Monday progress was being made in negotiations over the future of Vauxhall’s car plants in Britain but there were still issues to be settled.

“Some progress is being made in talks between key parties but there are still issues to be resolved,” said a spokeswoman for the Department of Business, Innovation & Skills.

“We, like everybody else, would like a speedy resolution but we want to get the terms right,” she said.

Vauxhall employs around 5,500 people in Britain, the majority of them at plants in Luton in southern England and Ellesmere Port in northwest England.

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