BERLIN - The German government made clear Wednesday that it still favour a consortium led by Canada's Magna International Inc. to take over GM's Opel unit, and said it hoped for an agreement over the next week with the U.S. automaker on the sale.
German officials met General Motors Co. (NYSE:GM) on Wednesday to exchange views on the three final offers for German-based Adam Opel GmbH.
Submitted on Monday, they come from the consortium of auto parts maker Magna and Russian lender Sberbank; Brussels-based investor RHJ International SA; and China's Beijing Automotive Industry Corp.
The government's preference for the Magna-Sberbank bid "has been confirmed by our evaluations," government spokesman Ulrich Wilhelm said at a regular government news conference.
Chancellor Angela Merkel said during a visit to northern Germany on Wednesday that the Magna bid has "some advantages." She added: "We have indicated that we see the Magna concept, for all the questions that certainly arise, as a sustainable one."
The government's endorsement comes after Magna confirmed Tuesday it has revised its offer for Opel, dropping the price and changing the proposed ownership structure.
Magna and Sberbank are now offering euro500 million, or about C$900 million at current exchange rates, for a combined 55 per cent stake in Opel. The two partners would each own 50 per cent of their consortium, or 27.5 per cent each of Opel.
Earlier this year, they had proposed a total investment of euro700 million, partly guaranteed by the German government, for 55 per cent of Opel, with Sberbank holding 35 per cent of Opel and Magna owning 20 per cent.
GM did not signal a favourite during Wednesday's four-hour meeting with German officials and others, though it made clear "that every offer has strengths and weaknesses," deputy economy minister Jochen Homann said.
However, the race appeared to be between Magna and RHJ. Homann said that, while the Chinese automaker is not entirely out of the running, it was "dropping away."
Wilhelm said that "our aim in the course of the coming week will be ... to reach a joint assessment and, if possible, a joint recommendation on how to proceed."
He said further steps likely will include more talks with GM and the U.S. government, along with "close contact" with the bidders and other European countries that have Opel sites.
German media have speculated that GM prefers RHJ. Wilhelm did not comment on that, but said that "possibly controversial" negotiations lie ahead. He noted that GM, not the German government, is the seller.
Wilhelm stressed that the process will continue until the autumn, when a deal is expected to close.
Opel employs 25,000 people in Germany, about half of GM Europe's total work force. German politicians have been keen to safeguard jobs ahead of elections in September, and the government is a key player in the negotiations because it is offering financial help to make a deal possible.
The federal government's preference for Magna is shared by the four German state governments where Opel has plants.
"All four states vote for Magna," Hendrik Hering, Rhineland-Palatinate's state economy minister, said Wednesday after conferring with his colleagues in the other regions.
"Magna has a strategic concept, management of its own and, with its partners, prospects in the growth market of Russia."
Magna, headed by Austrian-born entrepreneur Frank Stronach, hopes to use the Opel deal and the Canadian company's alliance with Russian carmaker Gaz to boost shipments of vehicles and parts from Europe to Russia, which could soon become Europe's largest car market, surpassing Germany.
Details of the offers by BAIC and RHJ have not been disclosed. German employee representatives have opposed RHJ, voicing fears that its aim might be simply to sell Opel back to GM -- a charge RHJ has rejected.
RHJ's initial offer included euro275 million for a 50.1 per cent stake in Opel along with a request for some euro3.8 billion in state aid along with the likelihood of cutting 9,900 jobs.
BAIC's preliminary offer -- worth euro660 million -- sought some euro2.6 billion in government guarantees and would see some 7,500 jobs eliminated.
Magna has said before it would likely cut some 11,600 positions.
Magna shares were up 51 cents to C$53.03 in Wednesday trading on the Toronto Stock Exchange.
