GM, German Officials At Odds Over Opel Deal

Automaker’s top negotiator meeting with German government's ‘Opel task force’ as the two sides grapple with differences over which of two suitors has the better offer.

BERLIN (AP) -- General Motors Co. made clear during a meeting with German government representatives Tuesday that it is still interested in selling the automaker's European Opel unit, a German official said.

The new GM management board, reshuffled after the company filed for bankruptcy protection earlier this year, will require more information before it can make a decision, the official said, speaking on condition of anonymity given the sensitivity of the talks.

Group Vice President John Smith attended Tuesday's meeting with the German government's "Opel Task Force," made up of federal and state officials.

There have been conflicting media reports over whether GM was interested in finding a way to keep Opel, or was still trying to seeking a deal with one of two suitors.

The German government favors an offer from Canadian auto parts maker Magna International Inc. and Russian state-owned bank Sberbank over an offer from Brussels-based investor RHJ International SA, because fewer jobs are at risk under Magna's offer.

Opel employs about 25,000 people in Germany, about half of GM Europe's total work force. German politicians have been keen to safeguard jobs before September elections. The government is a key player in the negotiations because it is offering financial help to make a deal possible, including the euro4.5 billion ($6.5 billion) credit sought for the Magna bid to avoid lengthy negotiations with other European countries that have Opel facilities.

Opel workers also largely backed Magna's plan and voiced intentions to pool funds to buy a stake in an independent company.

On Friday, however, GM's new board balked at picking a bidder because it reportedly has fears about GM's global small and midsize car technologies being used by Russian automaker OAO GAZ to update its vehicles and compete with Chevrolet. GAZ has ties to Magna and Sberbank and is likely to benefit from the deal.

Magna and GM's management reached an agreement in principle on control of the patents, as well as several other unresolved issues, and Magna submitted a new bid several weeks ago, said another person briefed on the talks. But the GM board on Friday essentially rejected the deal, the person said.

The board refused to make a recommendation on either bid due to concerns about Opel technology and financial issues that had GM paying too much for Opel expenses, said another person briefed on the talks. Neither wanted to be identified because the negotiations are private.

Also, the German government offered aid only for the Magna proposal, according to these sources.

GM would rather sell controlling interest in the money-losing operation as long as it can protect Opel's patents and other intellectual property from being used by a competitor, said the person, who asked not to be identified because the talks are private.

Under an arrangement formed earlier this year to keep Opel out of GM's filing for bankruptcy protection, 65 percent of the carmaker has since the beginning of June been formally under the care of a trustee, with GM holding the remaining 35 percent.

Fred Irwin, head of the trusteeship, told Deutschlandradio Kultur on Tuesday that GM still wanted to sell Opel.

In other developments, workers at Opel retracted their offer to sacrifice vacation pay to help the struggling automaker in protest at GM's indecision over the company's fate.

Franco Biagiotti, the workers' council chief at Opel's Bochum plant told the AP that union members were upset over GM's hesitation as well as the reports that it may want to keep the company to itself.

Biagiotti said workers at Opel's Ruesselsheim, Kaiserslautern and Eisenach plants had taken back the offer to give up vacation pay -- which could have saved GM millions of dollars.

The Bochum plant was not involved in the offer from the outset, Biagiotti said.

AP Auto Writer Tom Krisher contributed to this report from Detroit.

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