German officials have been steaming, because the GM board and some unnamed “advisers” are recommending the company keep Opel and thereby retain GM’s presence in Europe. Said advisers are also suggesting that the company look for financing from “other European countries” to keep control.
GM would be seeking some $4.3 billion. You can imagine how eager other European countries will be to cough up this money and incur the wrath of the Germans, Canadians, and Russians (all stakeholders)—not to mention the Obama administration, which has so far kept a discreet distance from the furor.
Negotiations to sell Opel to Magna, a Canadian automotive group, have been protracted for months (see our piece from May here) and have involved elaborate deal-making, even including some Russian financing. GM’s turnabout has massively irritated the German unions who threatened “spectacular measures” if the decision went against them. There are 55,000 jobs at stake. And the German government has already provided €1.5 billion in bridge financing and gone far out on a political limb for the deal.
So if the new GM board takes this route—and incidentally goes against CEO Fritz Henderson’s wishes (he has backed the Magna deal)—they will be stirring up a total hornet’s nest in Germany, and maybe elsewhere in Europe. The deal was due to be announced Friday. To try and unwind it now shows that GM’s board really doesn’t know what it’s doing, particularly in areas with big political implications.
Do you think the Obama administration will keep hands off in this highly charged situation, as it claims it will?
—jgoods
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