Germany's Merkel says GM decision on Opel urgently needed

ERJ staff report (AN)

BERLIN (Reuters) -- German Chancellor Angela Merkel expressed her regret at General Motors Co.'s failure to choose a buyer for its German unit Opel, and said that a decision was "urgently" needed for the carmaker's future.

In an interview with German public television station ZDF, Merkel said she felt there might be a conflict of interest between GM and countries with a stake in its European operations, but that progress was being made.

"I regret that a final decision wasn't made, but I hope it will happen soon, because both for the workers and the economic situation at Opel, we urgently need a decision," she said.

"The conflict of interest could be that we think Magna has made a very good offer ... which makes GM a minority shareholder in the whole set-up, and there may be voices at GM ... who'd prefer that this minority shareholding wasn't so marked," she said.

Despite German pressure to back a bid by Magna International Inc., GM on Friday declined to name the Canadian-Austrian automotive parts supplier as the winning bidder for Opel, leaving the fate of the carmaker up in the air.

Mindful of a federal election on September 27, the German government has offered financial backing for Magna's bid because it believes it would be the best option to save jobs at Opel, which employs about 25,000 in Germany.

German politicians have urged the United States to help broker a deal, and the Foreign Ministry said it had contacted the U.S. administration during the weekend with this in mind.

Extending the wait on the firm's future sparked a round of angry reactions this weekend from German politicians, who reaffirmed their support for Magna's bid.

Political contest

Merkel, a conservative, rules in coalition with her main rivals, the center-left Social Democrats (SPD), who have also seized on the political importance of Opel's future.

More talks were necessary, she said in the interview.

"Now I hope we'll make progress next week," she said. "I think we've moved things along well ... and that we're not far from the end, and hopefully we'll be at the end soon."

German Foreign Minister Frank-Walter Steinmeier, who is leading the SPD's challenge to oust Merkel in the September election, discussed Opel with U.S. Secretary of State Hillary Clinton by telephone on Saturday, his ministry said.

"Steinmeier stressed that after months of intensive talks, it was time for a decision -- and that workers at Opel deserved clarity on the issue, and a real perspective for their future," the ministry said in a statement on Sunday.

"Secretary Clinton said she would communicate the German government's position within the U.S. administration."

RHJ financing

Sources familiar with the talks said GM directors wanted Berlin to say what financing would be available to back a rival Opel bid by Brussels-based financial investor RHJ International SA.

Berlin and the German states that host Opel plants have made clear they want Magna to get the carmaker and are set to provide 4.5 billion euros ($6.4 billion) in state aid to make it happen.

A source close to the talks said the next GM board meeting would be at the start of September and that two bones of contention were likely to be discussed over the next week.

One was that Berlin was insisting GM should step in if the German aid proved insufficient. The other was that GM wants to receive royalties from Opel for the use of its technology even if the German carmaker files for insolvency.

Magna remained the favored candidate, the source added.

From Automotive News. (A Crain publication)