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GM drags feet on Opel deal

2009-08-05 09:21

Frankfurt - General Motors is taking more time to negotiate with Magna and RHJ International over the planned sale of its European arm Opel, the US-based company said on Tuesday.

Canadian auto parts group Magna and Belgium-based RHJ are locked in a takeover battle for Opel, in which GM is relinquishing control in return for state support.

GM was expected to recommend one of the two bidders to its new board of directors at a meeting on Monday. But it said on Tuesday it merely brought the board up to speed on talks without making a recommendation as negotiations were still dragging on.

German government officials and GM representatives are expected to meet with Magna and RHJ this week to further discuss the sale, sources said earlier this week.

GM, which holds 35% of Opel shares, and Germany, which will provide state aid, must agree on the buyer but so far the two have disagreed. Germany prefers the Magna offer and GM likes RHJ's bid.

German Economy Minister Karl-Theodor zu Guttenberg had said in a weekend newspaper interview both suitors had to improve their bids to win government backing.

Magna, a Canadian auto parts supplier, wants to expand Opel's full-scale car assembly business and forecasts high growth rates, particularly in Russia, home of its bidding partner, state-controlled bank Sberbank.

RHJ aims to shrink production to return Opel to profit and may be open to selling it back to GM at a later date.

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