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Magna’s GM Europe/Opel-Vauxhall Deal Stumbles On

RHJ, China Offers Resurface Pressurising Magna

Magna’s deal to buy GM Europe’s Opel-Vauxhall brands with its Russian partners was supposed to have been signed by mid-July, but as the deadline expired, challengers who fell by the wayside earlier are apparently back in contention, after being revived by some kind of magic sponge.

RHJ International, the Belgium based holding company linked to buyout artists Ripplewood of the U.S. was said to be in advanced talks to buy a majority in Opel-Vauxhall. China’s Beijing Automotive Industry Corp (BAIC) also submitted a plan to buy what amounts to old GM Europe.

The talks between the German government, which is expected to provide financing of €4.5 billion to the Magna deal, and the Canadian company, were said to be struggling over GM’s intellectual property, and arguments about Chevrolet’s position in the Russian market.

RHJ’s plan requires “only” €3.8 billion from Germany and it is said to want a stake of between 51 per cent and 55 percent in Opel-Vauxhall. Magna wants 65 per cent of the company for itself and its Russian partners. BAIC wants to use the Opel brand and technology to tap the Chinese market.

So far, Fiat, thought to hold the inside track at one time in the race to win Opel-Vauxhall, has said it would be interested, but isn’t willing to raise its old offer.

Logically though, it would seem that the German government is using pressure from these competing bids to pressurise Magna into an agreement, but not too quickly; just before the German election on September 27 would do nicely. Then any radical plans Magna might have for shaking up Opel-Vauxhall could be revealed without upsetting the politicians too much.

Neil Winton – July 15, 2009

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