Russia Weighs In On Growing Row Over GM U Turn
Russia today added to growing international consternation over General Motor's (GM) decision not to sell its European operations and warned that its lawyers were reviewing the surprise move.
A spokesman for Vladimir Putin, the Russian Prime Minister, said Magna, the Canadian car parts maker that was days away from buying GM's Vauxhall and Opel operations, and Sberbank, its Russian bid partner, planned to conduct a "deep legal analysis of the situation."
However, sources close to Magna said that, despite the months spent on the bid, which was in its advanced stages, the group was unlikely to take legal action as GM is one of its biggest customers.
Magna and Sberbank had been working since May on their plans to acquire a 55 per cent stake in GM's European business after the American car giant went bankrupt. But last night GM abandoned the planned sale in favour of a restructuring of the business.
The board of GM is understood to have become anxious that a sale could see the two car brands competing against their former parent in high-growth markets such as Russia.
Mr Putin's spokesman said: "The decision by General Motors arouses surprise in Russia. According to our information the Magna-Sberbank consortium is intending to carry out discussions with General Motors very soon and carry out a deep legal analysis of the situation." The Russian Government has repeatedly said that the sale of Opel to a Russian-backed group would show the readiness of US President Barack Obama to boost economic ties with Russia.
It is unclear whether GM will be forced to pay a break fee to the Magna/Sberbank consortium after terminating the deal.
Germany, which had been lobbying for Magna and Sberbank to buy the operations to preserve 25,000 German jobs, today branded GM's decision as "totally unacceptable" and demanded details over the US carmaker's plans for the business.
Christine Lieberknecht, the premier of Thuringia state, in which an Opel plant is based, called the decision a“low blow”.
It is understood Angela Merkel, Germany's Chancellor, will discuss the matter with the cabinet today. Juergen Reinholz, economy minister of Thuringia, said GM had signalled it would repay a €1.5 billion German bridging loan for Opel by the end of November.
Lord Mandelson said that he was keen for "very early discussions with GM over their plans for the business and how they will affect British plants and workers." He added: "I have always said that if the right long-term sustainable solution is identified then the Government would be willing to support this."
British unions expressed delight at the decision to scrap the sale which had threatened 5,500 jobs at Vauxhall's Ellesmere Port and Luton plants. Though a plan had been agreed that would have saved more workers than bad been initially expected, unions were sceptical about the Magna deal.
Tony Woodley, joint leader of Unite, the union, said the decision was "fantastic", adding: "There is no logic in breaking up the company. I believe it is the right decision for Britain and our plants." He called on Lord Mandelson to demand that GM give guarantees about future production.
Explaining its decision, GM said that Europe's business environment and its overall health had both improved since it put the division up for sale and that a restructuring plan was now the better option.
Magna declined to comment today although in a statement last night, Siegfried Wolf, its joint chief executive, said: "We understand that the board concluded that it was in GM's best interests to retain Opel." It added that it will "continue to support Opel and GM in the challenges ahead."
Germany had looked to be the winner from the Magna deal, which had secured the future of four Opel plants in the country. However, negotiations by Ms Merkel had caused controversy. Concerns were raised over her offer of €4.5 billion (£4.02 billion) in financial aid in return for the Magna deal.
Lord Mandelson was among those who had complained to the European Commission, warning it not to accept anything that looked like a "political fix or any linkage between aid and retention of jobs in any specific plant or country."
Joelle Milquet, vice-premier of Belgium, where a big Opel factory was to be closed, had also criticised the deal saying: "I think the German Government sought its own advantage."
The commission, which has powers to claw back aid that does not comply with strict European state aid rules, was examining the deal.
Article written by: Times Online
Published on: 14:51 04-11-2009
