Tuesday, September 29, 2009
Magna takeover under threat
Magna International's takeover of Opel/Vauxhall could be threatened amid mounting criticism from across Europe, according to sources close to the negotiations.
The agreement with General Motors needs heavy financing from European governments, especially Germany, as well as union support, and legal rubber-stamping.
Insiders emphasise that talks remain complex and 'it is not a done deal' as the European Commission scrutinises the state funding.
A rival bid from RHJ International required less funding than Magna and sources believe that the situation could change following Sunday's general election result in Germany.
Germany is set to provide 4.5 billion euros of financial support for the deal as part of Angela Merkel's efforts to protect 25,000 German jobs.
Magna's plans for Opel/Vauxhall involve cutting a significantly smaller percentage of jobs in Germany than in Britain and Belgium.
Despite the 4,000 German job cuts being the largest part of the overall 10,500 losses, Lord Mandelson, the Business Secretary, and other European leaders have expressed anger at the plans.
Lord Mandelson, who was also due financially to support the Magna deal, suggested it was not 'commercially the most viable plan'.
Production figures reveal that the British and Spanish plants under threat of closure produce vehicles more efficiently than two of the carmakers' three German factories.
The European Commission is believed to have sent a list of 100-200 questions to Germany to answer on the financial support it is making.
Meanwhile, Magna remains confident that the deal will be signed with GM soon. It is believed to be frustrated at the 'politics' being played, given that it has been in contact with the EC throughout the process.
DATED: 29.09.09
FEED: AW
