While Magna looked to be the preferred Opel suitor last week, Angela Merkel, Germany’s chancellor, told all three of Opel’a current bidders they must improve their offers.
Merkel told Fiat S.p.A., Magna International, and RHJ International that they needed to assume greater risks and make more credible commitments to protecting jobs and facilities.
Karl-Theodor zu Guttenberg told reporters that Fiat’s offer looked serious after a meeting with the company’s CEO, Sergio Marchionne. He also added that Magna and RHJ are still in contention. “There’s no favorite. Everyone knows that improvements are necessary,” he said.
While all three bidders are working very intimately with the German government to come up with offers, the government made it clear GM will ultimately decide which company will end up with Opel and its sister brand Vauxhall. The pressure to choose a bidder is intensifying as GM’s June 1 restructuring deadline approaches.
GM may have the final say as to which company will end up buying Opel, but the German government will play a crucial role as it will supply billions of euros in loan guarantees to make the deal go through. The German government is also looking to save as many German jobs and facilities as possible as part of the sale.
Last week, top ministers preferred Magna’s bid for Opel because it announced that under its control, the under-used Opel plants would be available for other automakers to lease. This would save plant closings as well as jobs. Since then, all three bidders have improved their offers and it appears there is no longer a clear favorite.
Guttenberg said the government hoped to be able to settle on one or more preferred bidders on Wednesday, which could lead to further negotiations. He also said that insolvency remained an option for Opel if the bidders did not make credible commitments to saving German jobs and show a willingness to take greater risks.
Look for a preliminary decision on an Opel buyer as early as tomorrow, with a real decision likely coming sometime next week. The German government would prefer to have an Opel sale started before GM’s June 1 restructuring deadline in case Opel’s American parent must file for Chapter 11 bankruptcy, which now looks inevitable.
Source: Automotive News