MUNICH — The board of General Motors has decided to sell Opel to Magna International Inc. but has attached strings to the sale, sources familiar with the situation told Reuters.
"It will be Magna, but under conditions," one source said on Thursday.
A separate, German government source in Berlin said: "We won’t know whether Magna can meet the conditions set by GM until after the German election," which takes place on September 27.
GM Europe declined comment.
Earlier, GM said after a two-day board meeting it had approved a course of action for Opel and would be communicating its recommendation within the next 24 hours.
The trust supervising Opel announced that it would hold a news conference in Berlin at 4:15 p.m. (10:15 a.m. ET) to announce a decision on a majority investor in Opel. GM’s chief Opel negotiator John Smith and Fred Irwin, chairman of the Opel trust, will be at the news conference.
The trust was set up in May to keep Opel from being swept into GM’s bankruptcy and has the final say on who buys the company. It comprises two representatives each from GM and Germany, as well as an independent chairman who is supposed to act as an arbiter between the two sides.
The decision is being closely watched in Germany, where Opel employs about half of its 50,000 European workers at four plants making everything from three-door Corsa subcompacts to Zafira minivans.
The carmaker has two factories in the U.K. that produce automobiles under the Vauxhall badge as well as major sites in Belgium, Poland and Spain.
A group led by Magna, North America’s largest parts supplier, has a promise for the financial backing of the German government to take control of Opel. Belgium-based RHJ International made a rival bid that GM management has said would be easier to implement.
The German government and Opel’s labor chiefs have expressed a clear preference for Magna’s bid, which they believe will save more jobs in Germany and offer the carmaker a long-term future.
GM signed an initial agreement in May to sell a majority stake in Opel to a Russian-backed consortium led by Magna.
Since then senior GM executives had become increasing worried that Opel under Magna could transfer important technological expertise to the supplier’s industrial partner GAZ, Russia’s second-largest domestic automaker and a rival to GM’s successful Chevrolet brand in Russia.
Opel’s Russelsheim operations in Germany also have been the center for developing vehicles that are crucial to GM’s vehicle line-up and its effort to deliver better sales of more fuel-efficient cars in the United States.
The Chevrolet Malibu and Buick LaCrosse mid-size sedans and Chevrolet Cruze compact sedan are built on Opel-developed platforms.
$6B to keep Opel
Financial adviser KPMG presented a report to GM’s board that said the automaker’s management had used "overly optimistic" assumptions when it prepared an earlier estimate of the cost of keeping Opel
KPMG said GM would need up to $6.1 billion in cash to keep Opel, more than the $4.65 billion it had estimated as late as June, according to a copy of the report presented to the board at the meeting in Detroit.
Opel’s fate has become a hot-button political issue in Germany ahead of elections looming at the end of the month since some 25,000 jobs in Germany – about half of GM"s European workforce — depend on the GM unit.
Analysts say GM faced a dilemma with Opel since any of the choices carried risks for an automaker struggling to turn itself around under the majority ownership of the U.S. government.
Selling to Magna, as urged by the German government, was seen by some GM executives as risking key small car technology and an edge in the fast-growing Russian auto market.
The Magna plan involves an equity stake in Opel for Russia’s state lender Sberbank.
On the other hand, GM’s European operations lost $2.8 billion in 2008 and the long-running debate over Opel’s fate in Europe has cost the U.S. automaker goodwill with organized labor and other stakeholders, analysts said.