Europe’s politics hold up GM’s Opel sale
|October 20, 2009||http://detnews.com/article/20091020/OPINION03/910200321|
Europe’s politics hold up GM’s Opel sale
The Germans aren’t the only ones hoping to hurdle European Union objections to General Motors Co.’s plans to sell a majority stake in its Adam Opel GmbH unit.
GM is pushing to close "open issues" in a binding deal, perhaps as early as this week, that would convey 55 percent of GM’s German automaker to Magna International Inc. of Canada and Sberbank, a Russian financial player with close ties to Vladimir Putin’s Kremlin and the automaker GAZ.
GM’s board, which vetted proposals for Opel at meetings in late August and September, is not expected to reconsider the transactions unless emerging EU questions force a reappraisal. GM management, I’m told, is using the holdup simultaneously to reassess the logic of its complex Opel deal and to press to get it done, politics or not.
Enter the EU, adept at doing the one thing bureaucrats in Brussels do best these days: referee sour-grapes complaints between member states whose leaders are shocked, shocked, that one of their own might cut a deal intended to disadvantage another — in this case, the Germans stand accused of sticking it to the Belgians.
"It’s surreal," one person close to the deal told me Monday. "It’s never-ending, which makes me think surreal is the norm."
The only surprise here should be the fact that anyone seriously thinks member states would do anything other than try to protect their own people and plants, whatever the EU’s Byzantine rules against it. In a global recession, who’s working and who may not be are keenly felt local issues that affect national politics, which is why the Germans (quietly) prefer a workout for Opel that favors their sites over those elsewhere in Western Europe.
Because behind the politics, the back-channel phone calls, the press leaks and the official letters masking the quid pro quos of deal making amid Germany’s national election campaign, that’s exactly what happened, and everyone concerned probably knows it. The challenge is finding enough hard evidence to prove it, or risking the consequences of a far more unsavory outcome. (Can you say bankruptcy and thousands more jobs lost across Europe?)
Last week, the EU’s competition commissioner, Neelie Kroes (who’s Dutch) voiced concern over Germany’s plans to provide $6.7 billion to support the takeover of Opel by the Canadian auto parts maker and the Russian lender if the money was available only for Magna-Sberbank. The EU’s enterprise commissioner, Günter Verheugen (who is German), doesn’t share her concerns, natch.
Ah, to see the EU’s "can’t-we-all-get-along" facade cracked once again. It’s no secret to anyone who’s been paying attention that the government of German Chancellor Angela Merkel has long maintained that the Magna-Sberbank deal is Berlin’s "preferred bid" to GM keeping Opel or selling a controlling stake to RHJ International Inc., a Belgium-based private equity firm.
The Magna-Sberbank transaction, which would allow GM to retain a 35 percent stake, is favored by Opel, German labor and most politicians there because a) it wrests majority control from the Americans and b) it ensures more jobs and plants in Germany, even as it effectively sentences Opel’s Antwerp, Belgium, plant to the automotive scrap heap.
At this point, the deal is favored by GM, too, but the Detroit automaker’s predicament is delicate. If GM’s directors push management to reopen the bidding, the move would be a tacit admission that the automaker was pressured to sell Opel to the Magna-Sberbank consortium. Second, it would imply that German politicians were less than truthful about their intentions.
Either way, GM would help make the EU’s case against the Germans, which is not where GM wants to be with a new business-friendly government in Berlin prepared to deliver $6.7 billion in government financing.
That explains why the German government, in a letter to GM late Friday, assured the automaker that its aid would be available to finance any bid GM pursues. The EU is satisfied, Germany gets the tie-up it wants, GM closes the transaction, and the Belgians lose — a likely outcome whatever Opel’s future.