After a lot of arm twisting, and several deadlines set by the US court and the German government, the Opel deal finally is entering the final round—for now. After a suitor has been found, a French woman may spoil the whole wedding.
Reuters has it that China’s BAIC has finally done what was expected they would do: Submit a non-binding offer for Germany’s Opel. About time it is.
Federal bankruptcy Judge Robert Gerber had given GM lawyers a Friday deadline to submit papers. His Honor will rule by July 10 on a plan to create a “new GM,” and the Opel issue needs to be settled. The Germans had set a July 15 deadline for final offers.
Magna and its Russian partners appears to be way ahead of BAIC. Magna’s board of directors wants to approve a business plan for Opel on July 7, an act that is widely seen as a rubberstamping exercise.
Belgian holding company RHJ International is officially still in the game. After posting a sharp loss on Wednesday, it has become very doubtful whether RHJ has the necessary wherewithal to play with the big boys.
Business plans submitted will be evaluated by PriceWaterhouse Coopers on behalf of Berlin. The government will have to cough up more money after already extending Opel a six-month 1.5 billion bridge loan. Price Waterhouse needs to determine whether the proposals are sound.
Whoever wins the race for Opel isn’t in the clear yet. It’s just beginning to get interesting.
When asked whether Brussels anti trust watchers will examine any deal for Opel very closely, German Deputy Economics Minister Jochen Homann told reporters: “Yes, clearly.” It sounded like he liked it. Homann expressed skepticism over Magna’s concept for Opel. “We will see whether Magna’s concept is successful. It is based on theories over which one can heartily discuss . . . There are justifiable question marks.” Homann pointed to the chronic structural overcapacities that the EU is concerned about and cautioned that the European Commission has stated a bailout could not distort competition.
Heinrich Weiss, President of the German-Russian Chamber of Commerce Had harsher words, says Der Spiegel. Weiss called the Magna/Sberbank concept “amateurish. It is irresponsible vis-a-vis the taxpayer to keep this ramshackle business alive.” According to Weiss, Magna, Sberbank and GAZ are “weak partners.” Like Homann, Weiss is concerned about overcapacity. “The weakest players have to go.”
There is another issue that gives the amateur league that competes for Opel the heebie-jeebies: French Economy and Finance Minister Christine Lagarde is widely rumored to become the European Union’s Competition Commissioner in November. France doesn’t have any Opel plants. France is home to key competitors PSA Peugeot Citroën and Renault, which counts the French state as a large shareholder. They would be delighted if Opel bit the dust.
So this is how it might go down: A partner is found for Opel, and the matter can be laid to rest until the September elections in Germany. After the elections, Brussels shoots the deal down. There will be perfunctory protests from Germany. Then, Europe’s auto makers can breathe a little easier.
All those people saying there is overcapacity in car manufacturing are absolutely correct.
All this effort to bail out car companies by the U.S., Canada, and Germany means that some of us taxpayers are going to be wasting a lot of money.
What happened to Fiat?
And by the way, what’s nice about lady?
folkdancer +1. The auto industry is going through a little industrial evolution right now, only the strong will survive. There’s no need to have several automakers out there that are too large to be a “boutique” manufacturer, but too small to be truly mainstream. Government bailouts to car companies will likely prove to be a waste of money, no matter what country. I hate watching my tax money getting pissed down the drain.
Stingray:
a) FIAT might be having no money and enough other problems with Chrysler, currently.
b) Of course, nothing is nice about this lady. But wait until Berlusconi sends his girls in to the rescue (check: http://www.timesonline.co.uk/tol/news/world/europe/article6418583.ece). They might even appear topless in public. Compare & imagine!
So, most of the problems are almost solved. already. Just don’t forget to buy two new cars a year to cope with this overproduction issues.
PriceWaterhouseCoopers (PWC) is analyzing the bids? Aren’t they the guys who failed to discover the missing $1B in the Satyam fiasco? I feel better already.
What a novel idea, eliminating overcapacity in a manufacturing based industry by allowing the least efficient and least attractive operations to fail.
LULZ that it looks to be a French Bureaucrat who makes this come to pass.
Making someone from France the European Union’s Competition Commissioner sounds like a bad joke to me. If there’s one country in Europe that’s constantly doing its best to prevent a free market from happening it’s France. I mean they were the first to bail out their auto industry…cheeky bastards…
I wonder what would happen if you threw a bucket of water on her? A pile of sugar?
Making someone from France the European Union’s Competition Commissioner sounds like a bad joke to me.
This European Union Commissioner, who happens to be a woman, is doing her job.
The countries who belong to the European Union have signed agreements that require them to operate a little like our States but not quite. The balance of how each member country can support industries within their borders is a delicate balance. How much can they support their workers but does this provide an unfair advantage for their manufacturers against the manufacturers in other member countries?
Lets wait and see how the commissioner’s rulings turn out. Incidentally, MB, Audi, and VW along with the French manufacturers might also like Opel to disappear.
Honestly, some of you guys seem to hate or fear women.
Folkdancer,
They fear women because secretly they know that we know more about cars than they do! ;O)
Bertel & Katie:
Neelie Kroes was sharp enough the last years anyway. Normally it cannot get much worse.
Bertel: I do not see this timeline. The EU e.g. approved a rescue loan for the German retail chain Quelle within a day. If one party is chosen for buying Opel, this will have already been aligned with the EU way before, or will get approval within a short time frame. I do not see this pending until November, no chance.