GM Won't Sell Opel...For the Moment

November 5, 2009 (LPAC)—In what did not come as much of a surprise to insiders, GM's board late Tuesday backed off from an earlier statement of intent that it wanted to sell its German Opel division to the Canadian-Russian Magna Group, after talks over a possible sale have been dragging on for months.

The decision caused great embarrassment to leading German politicians backing the Opel-Magna deal, especially because it was announced within minutes after visiting German Chancellor Angela Merkel had addressed the U.S. Congress, Tuesday afternoon. GM, after all, is nominally owned by the U.S. government, which now holds 60% of its shares.

The governor of the German state of Hesse, where General Motors Co.'s Opel unit is headquartered, including its 7,000 engineer Rƒ center, said this morning he is "concerned and at the same time annoyed that the months-long efforts to find a good solution for Opel have failed because of GM." Koch said that considering the "negative experience in recent years with GM's corporate policy, I'm worried a lot about the future of (Opel) and its staff," adding that he expects GM to repay by Nov. 30 the bridge financing provided by the German state "so that the German taxpayer doesn't get harmed."

Christine Lieberknecht, newly-elected governor of the state of Thuringia, where Opel's Eisenach plant is located, also spoke of a "hit in the belly," and a "total surprise," adding that she will see to it that the 1,800 jobs at Eisenach be secured.

Workers' representatives at Opel said they would fight to protect jobs now, because it could be expected that the "consolidation plan" GM is talking about, would imply the elimination of thousands of jobs, and probably mean the end to the three plants at Antwerp, Bochum, and Kaiserslautern.

Russian wires spoke of the GM decision being motivated by the intent to block the transfer of Opel technology know-how to Russia, which would have been the case if Magna together with its Russian partner Sberbank would have taken over Opel.

GM, one may add, also needs Opel because of the Rƒ center in Ruesseslheim with its 7,000 engineers, which works for all of GM internationally. Whether GM will really keep Opel and not sell it off to some financial shark like the Ripplewood fund at the next best occasion, remains to be seen.