Wednesday, May 20th 2009. Final deadline for anybody who’s seriously interested in taking over Opel. Today, concrete and final plans and bids must be presented to GM and the German government in Berlin. Today, Chancellor Angela Merkel, Vice Chancellor Frank-Walter Steinmeier, Economy Minister Guttenberg, Finance Minister Peer Steinbrück und Minister of Labor Olaf Scholz are meeting in Berlin to decide next steps, Automobilwoche [sub] writes. GM emissaries from Detroit are also standing by in Berlin to check the bids, Handelsblatt learned.
A bridge loan, estimated at €2 billion, has already been arranged. Condition: There needs to be a viable partner, and GM needs to agree to the German trustee model, which hasn’t been met with a lot of applause in Detroit. But they are running out of time and money at RenCen. When GM goes bankrupt by the end of the month, and no Opel deal is closed, all bets are off. Only two bidders seem to stand a chance in Berlin:
Fiat and Magna. Both companies are lobbying hard. Fiat’s Sergio Marchionne yesterday met Berthold Huber, head of the metal workers union IG Metall. Huber prefers Magna, and Marchionne tried to talk him out of it. While Sergio shmoozed the unions and Thuringia’s premier Dieter Althaus, Magna had a sit-down with Opel’s worker’s council to get even more support for their concept. It’s popular in Germany, because it doesn’t plan plant closures in Deutschland. According to Reuters, the Magna plan includes opening up under-used Opel plants to other automakers and allowing them to use Opel platforms to bring niche models to market quickly. Bloomberg identified the third bidder as RHJ International SA, a Brussels-based investment firm started by Ripplewood Holdings LLC founder Timothy Collins. The Germans prefer someone who knows more about cars than what can be learned from the backseat of a limo.
This weekend, a German government delegation will travel to Washington DC to sell their trustee model. If there is no buy-on in DC, then Economy Minister Guttenberg has another option: “an orderly bankruptcy.” No trustee model, no loans from Germany, no loans from Germany, no interested investor. And Opel will keel over with the mother ship
Speaking in Berlin after the government meeting, Labour Minister Olaf Scholz said preliminary decisions on Opel must be made by the beginning of next week.
“We don’t have much time. Decisions must be made this week, or at the latest by the start of next week,” Scholz told a news conference.
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I have developed a test if a plan is viable:
– if the potential investor invests his own money and is able to get free-market financing, the plan is viable
– if it requires government investment or “bridge to nowhere” loans, the plan is not viable.
– apply this test to all plans that have been and will be presented to governments
This test is so simple, even an MBA can understand it. One could add some engineering components to the test (desirability and profitability of current products) etc. Either way, what I’ve seen so far: Fail!
From Ontario News Reports today May 20th, Magna is favoured by the German Government to take over Opel!
Its good to be from that area of the World I expect as a Country like Germany would favour one of there own to purchase Opal rather than one from Italy! Food for thought eh?
You know what would be funny (peculiar, not “ha ha”) irony?
GM and Chrysler dies.
Magna-owned Opel (and Vauxhall – just a brand for the UK) and Saturn (just a brand for the US and Canada) survives.
Buick survives as part of Shanghai Motors and sells Chinese cars in North America (mostly to rental car agencies and retirees, natch).
Jeep survives and is the sole remaining portion of Willys-Overland/Kaiser-Jeep/American Motors/Chrysler/Daimler-Chrysler/Cerberus/Fiat to continue sales in the USA (all imported from India and “assembled from kits” in the southern USA, made by Mahindra). Mahindra make “Jeeps” for India, if I am not mistaken. Or, it could be Mitsubishi (which makes “Jeeps” for Japan).
“I have developed a test if a plan is viable:
– if the potential investor invests his own money and is able to get free-market financing, the plan is viable
– if it requires government investment or “bridge to nowhere” loans, the plan is not viable.
– apply this test to all plans that have been and will be presented to governments”
I like that plan as long as it is also broadened to include military interventions. Can’t get private money to start a war … no war.
” … a Country like Germany would favor one of there own to purchase Opel rather than one from Italy … ”
Magna is a Canadian based company, so I’m not sure what your point is. Germany likes Canada more than it does Italy?
John Horner, Frank Stronach is Austrian, and Magna merged with the old Austrian auto firm Steyr. Their substantial Austrian factories are/were known as Magna/Steyr, and have produced vehicles for other manufacturers for decades, including Chrysler/Jeep products, and other for BMW, etc.
I think Magna’s approach is perceived as more “Germanic”, more nuts and bolts production based, than Fiat’s more grandiose global merger/alliance plans.
Frank Stronach’s lovely daughter Belinda is/was one of Bill Clinton’s gal pals. Whether that helps or hurts daddy with US politics is above my pay grade.
I would wait a week for BK and then buy it from the trustee. Critical to get GM totally out of it for good. Forget Vauxhall.
Then make my deal with the German gov.