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VW Threatens to Pull Business from Magna Over Opel Acquisition

The CEO of Europe’s biggest automaker said last Friday that he could reduce business with supplier Magna International if it acquires Opel from General Motors, adding more tension to the negotiations over the sale of GM’s Europe operations.

Volkswagen CEO Martin Winterkorn said that his company viewed Magna’s Opel bid suspiciously, and would reconsider doing business on some components with the supplier. In response, Opel labor leader Klaus Franz said that Volkswagen threat “not to award Magna with contracts is tantamount to blackmail.”

“Whoever says a rescue of Opel through Magna poses a competitive disadvantage is hoping for the downfall of Opel in order to gain an edge for himself and reduce his own over-capacities at the cost of Opel,” Franz said. He also said Volkswagen has had state support for decades because the automaker’s home state, Lower Saxony, has a 20-percent stake in the company.

Magna has said that it would keep its supplier operations separate from its automotive operations. Earlier this month, Ford said it was not concerned about Magna winning control of Opel. Ford’s CFO, Lewis Booth, said the company would cooperate with Magna to minimize conflicts.

“We’ve had discussions with Magna about ensuring the appropriate safeguards for our intellectual property,” he said. “We’ll work with Magna to make sure we mitigate any ramifications.

Magna is the Opel union’s preferred buyer in the bidding for GM’s Opel. The German government has repeatedly said that it supports Magna’s plan of expanding Opel by more heavily focusing on the Russian market. GM has favored a rival offer from investment firm RHJ International – a bid that may become more appealing now that Germany’s top automaker has expressed its disdain for the Opel-Magna deal.

Source: Automotive News

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