GM Board Recommendation to Sell Majority Stake in Opel/Vauxhall to Magna International/Sberbank

[Drew Dowdell]

GM Board Recommendation to Sell Majority Stake in Opel/Vauxhall

to Magna International/Sberbank

• GM to sell 55% stake in New Opel to Magna/Sberbank
• Agreement on new ownership structure signals fresh start for New Opel
• Employees to hold 10% stake in New Opel
• Government supports financing through additional state guarantees

Zurich. General Motors today announced that its Board of Directors supports a bid from the consortium of Magna International Inc. and Sberbank to buy a majority stake in its European Opel/Vauxhall operations.

Several key issues will be finalized over the next few weeks to secure the binding agreements, including the written support of the labor unions to support the deal with the necessary cost restructuring for viability and the finalization of a definitive financing package from the German government. The definitive agreements should be ready to sign within a few weeks, with closing to follow within the next few months. Under the deal, Magna/Sberbank will purchase a 55 percent stake in New Opel; GM will hold a 35 percent stake and employees will be provided a 10 percent stake.

"The hard work over the past two weeks to clarify open issues and resolve details in the German financial package brought GM and its Board of Directors to recommend Magna/Sberbank," said Fritz Henderson, GM President and CEO. "We thank all parties involved in the intensive process of the last few months -- especially the German government -- for their continued support that enables this new venture. I'd also like to thank the Opel and Vauxhall customers for their continued loyalty. GM will continue to closely collaborate with Opel and Vauxhall to develop and produce more great cars, such as the new Insignia and the new Astra," Henderson added.

The agreement will keep Opel/Vauxhall a fully integrated part of GM's global product development organization, allowing all parties to benefit from the exchange of technology and engineering resources. The new ownership structure constitutes a new lean, efficient and independent organization for the Opel and Vauxhall brands. The current portfolio of Opel/Vauxhall cars and the models in the pipeline are a strong basis for future success.

Participating in GM's global technology development and purchasing organizations secures important economies of scale for Opel/Vauxhall and other GM brands. For example, vehicles that represent new propulsion technologies, such as the Ampera extended-range electric vehicle, can only be brought to market in a joint effort.

"GM operates many joint ventures around the world and has proven in the past that this business model delivers the right balance of independence, innovation and synergies," said John Smith, GM Group Vice President Business Development. "All parties will work hard to close the deal as soon as possible," he added.

About General Motors: General Motors Company, one of the world's largest automakers, traces its roots back to 1908. With its global headquarters in Detroit, GM employs 219,000 people in every major region of the world and does business in some 140 countries. GM and its strategic partners produce cars and trucks in 34 countries, and sell and service these vehicles through the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Opel, Vauxhall and Wuling. GM's largest national market is the United States, followed by China, Brazil, the United Kingdom, Canada, Russia and Germany. General Motors Company acquired operations from General Motors Corporation on July 10, 2009, and references to prior periods in this and other press materials refer to operations of the old General Motors Corporation. More information on the new General Motors Company can be found at www.gm.com.
In Europe, GM sells its vehicles in over 40 markets. It operates 10 vehicle-production and assembly facilities in seven countries and employs about 50,000 people. More information on GM can be found at http://media.gmeurope.com and http://www.gmeurope.com. GM Europe executive blog at http://drivingconversations.com.

[ellives]

The signature at the bottom should say:

About General Motors: General Motors Company, one of the world's largest automakers, traces its roots back to 1908 and was killed due to the greed and avarice of unions worldwide and the ineptitude of management and its inability to respond to union labor demands. With its global headquarters in Detroit, GM employs 219,000 people in every major region of the world and does business in some 140 countries. GM and its strategic partners produce cars and trucks in 34 countries, and sell and service these vehicles through the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Opel, Vauxhall and Wuling. GM's largest national market is the United States, followed by China, Brazil, the United Kingdom, Canada, Russia and Germany. General Motors Company acquired operations from General Motors Corporation on July 10, 2009, and references to prior periods in this and other press materials refer to operations of the old General Motors Corporation. More information on the new General Motors Company can be found at www.gm.com.

In Europe, GM sells its vehicles in over 40 markets. It operates 10 vehicle-production and assembly facilities in seven countries and employs about 50,000 people. More information on GM can be found at http://media.gmeurope.com and http://www.gmeurope.com. GM Europe executive blog at http://drivingconversations.com.

[NINETY EIGHT REGENCY]

Well it seems PCS missed the mark on this one. He said GM was going to keep Opel. I guess not. I really wanted GM to hold on to Opel/Vauxhall.

I do not understand this part if GM is sellling a 55% stake:

The agreement will keep Opel/Vauxhall a fully integrated part of GM’s global product development organization, allowing all parties to benefit from the exchange of technology and engineering resources.

[FUTURE_OF_GM]

From what I gather, Magna just wants to profit from this, maybe?

Why else would GM keep Ople/Vauxhall integrated into their product plans unless Magna just wants $$$?

[the_yellow_dart]

Das ist ein Deustches auto, eh?

[Justin Bimmer]

You know your union jab is completely ridiculous. They are no more greedy then stock holders or other parts of the "capitalist" mentality. GM lost because they didn't keep up with the times, period.

[hyperv6]

Well it seems PCS missed the mark on this one. He said GM was going to keep Opel. I guess not. I really wanted GM to hold on to Opel/Vauxhall.

I do not understand this part if GM is sellling a 55% stake:

The agreement will keep Opel/Vauxhall a fully integrated part of GM’s global product development organization, allowing all parties to benefit from the exchange of technology and engineering resources.

With the German goverment and Union it was going to be near impossible to keep Opel without major changes in the plan.

Magna and the Russians need GM as without them this just would not work for them.

I just wonder if GM will limit technology they put into Opel now. It would protect GM but also hurt GM is Opel falls behind the other companies.

[NINETY EIGHT REGENCY]

With the German goverment and Union it was going to be near impossible to keep Opel without major changes in the plan.

Magna and the Russians need GM as without them this just would not work for them.

I just wonder if GM will limit technology they put into Opel now. It would protect GM but also hurt GM is Opel falls behind the other companies.

I listened to these experts last night. This is what they had to say with an injection of my commentary:

I really did not want Magna to get it. I am sorry, that is how I feel. Canada now has its first owned car company. Magna is going to get backlash because they build cars and parts for other car makers. They may pull their business. Volkswagen already threatened they would. Maybe GM knows something I do not. Apparently they do. I listen to experts and they said GM had no choice but to sell the way they did. They said GM did not have the money to keep Opel or turn Opel around. There was the issue of the German government and the German unions. I heard they are something else compared to the American unions. A lot of this was politics because of the German elections. GM had to decide between keeping the volume (sales) or keeping their intellectual property. GM chose intellectual property. Opel in Europe is like Volkswagen. There are too many carmakers in Europe selling cars.

They said Opel is like Volkswagen without Audi. The thing is Volkswagens are cheaper cars. Audis and Volkswagens share parts. They can make money. Opel has no prestige brand in Europe. Magna needs GM and needs the volume. GM was backed into a corner.

[Z-06]

I listened to these experts last night. This is what they had to say with an injection of my commentary:

I really did not want Magna to get it. I am sorry, that is how I feel. Canada now has its first owned car company. Magna is going to get backlash because they build cars and parts for other car makers. They may pull their business. Volkswagen already threatened they would. Maybe GM knows something I do not. Apparently they do. I listen to experts and they said GM had no choice but to sell the way they did. They said GM did not have the money to keep Opel or turn Opel around. There was the issue of the German government and the German unions. I heard they are something else compared to the American unions. A lot of this was politics because of the German elections. GM had to decide between keeping the volume (sales) or keeping their intellectual property. GM chose intellectual property. Opel in Europe is like Volkswagen. There are too many carmakers in Europe selling cars.

They said Opel is like Volkswagen without Audi. The thing is Volkswagens are cheaper cars. Audis and Volkswagens share parts. They can make money. Opel has no prestige brand in Europe. Magna needs GM and needs the volume. GM was backed into a corner.

There might be another angle, calm the storm for the German elections (note the decision of sale does not go forward till November, i.e. after elections) make Merkel look like a hero(ine) and then get back to the drawing board. What I do not understand is how this news came contrary and quickly to the article you posted yesterday as of GM keeping the division and board rejecting the Magna led investment.

[NINETY EIGHT REGENCY]

There might be another angle, calm the storm for the German elections (note the decision of sale does not go forward till November, i.e. after elections) make Merkel look like a hero(ine) and then get back to the drawing board. What I do not understand is how this news came contrary and quickly to the article you posted yesterday as of GM keeping the division and board rejecting the Magna led investment.

Agreed. Then I followed up with this:

Ownership Stake:

Magna (27.5%) Sberbank (27.5%) GM (35% ) (10%)Opel Employees

This is the part I do not understand if GM is selling that 55% stake:

The agreement will keep Opel/Vauxhall a fully integrated part of GM’s global product development organization.

Something does not seem right or finalized about this.... This is not finished....

[ZL-1]

I admit I was expecting GM to stall further, until after the German election... what will be interesting to follow will be EU ministerial meetings after Magna deals its blow to non-German Opel plants...

[Z-06]

I admit I was expecting GM to stall further, until after the German election... what will be interesting to follow will be EU ministerial meetings after Magna deals its blow to non-German Opel plants...

Considering how GM has negativity among Germans, I guess it is trying to play "nice" and let Sberbank and Magna show true colors or is just being forced into playing the dice possibly due to pressure from Merkel. Now questions are being asked surely some friction is going to rise in Germany against Magna.

[hyperv6]

I listened to these experts last night. This is what they had to say with an injection of my commentary:

I really did not want Magna to get it. I am sorry, that is how I feel. Canada now has its first owned car company. Magna is going to get backlash because they build cars and parts for other car makers. They may pull their business. Volkswagen already threatened they would. Maybe GM knows something I do not. Apparently they do. I listen to experts and they said GM had no choice but to sell the way they did. They said GM did not have the money to keep Opel or turn Opel around. There was the issue of the German government and the German unions. I heard they are something else compared to the American unions. A lot of this was politics because of the German elections. GM had to decide between keeping the volume (sales) or keeping their intellectual property. GM chose intellectual property. Opel in Europe is like Volkswagen. There are too many carmakers in Europe selling cars.

They said Opel is like Volkswagen without Audi. The thing is Volkswagens are cheaper cars. Audis and Volkswagens share parts. They can make money. Opel has no prestige brand in Europe. Magna needs GM and needs the volume. GM was backed into a corner.

Well it looks like I was not too far off from my observation.

The way I saw it the goverment and unions were going to stone wall GM if they kept Opel. Also Magna just at this point can not go it alone in the short term. The Russians could fund them to independence later but if that happened they would get nothing from GM.

My hope is GM has stripped much of Opel and gives them nothing major in the future to protect their properties.

[ZL-1]

And now it seems the Belgian government is complaining about Germany breakin EU rules on state aid to private companies, and the unions are not pleased and want to be able to veto job cuts, transfer of production or plant closures (because they are afraid production will be moving to Russia IMO). Link to Autobklog entry.

I still this is going to be fun to watch

Edited September 13, 2009 by ZL-1

[FUTURE_OF_GM]

If Germany wants GM out that bad, then I say they let Opel fall on it's face. It's a "Jewel of Germany" let Germany save it. GM should concentrate on building it's other brands.

[NINETY EIGHT REGENCY]

GM is up to something. The paperwork will be finalized in November. This is about politics. The Germans wanted the sale before the election and plus the German unions wanted guarantees. GM knows something we do not. Somehow, this is not over or finalized yet. I might owe PCS and apology about what I said.

Now the other governments are getting involved in this as well. It is almost like GM knew this was going to happen....

It is like GM has some back up plan and has not played its hand yet.

Like Ike told Tina in the film "What's Love Got To Do With It" to quote: This s*** ain't over with Anna Mae.

I thought it was odd everyone kept saying after the announcement last week it was not finalized and the saga will continue. Magna is now taking the heat for the job losses and not GM. It appears that GM or someone making them see it was not bad as you thought it was under us....

If Opel crashes( the same thing that happened to GM NORTH AMERICA), then Opel would be in the same position as GM North America is in with restructuring.

Edited September 13, 2009 by NINETY EIGHT REGENCY