Merkel renews backing for Magna's Opel bid

[August 21, 2009]  BERLIN (AP) -- German Chancellor Angela Merkel has offered renewed backing for a bid for General Motors Co.'s Opel unit from auto parts maker Magna, saying in an interview published Friday that it is "the better concept."

Canada's Magna International Inc., in a consortium with Russian lender Sberbank, is competing for a majority stake in Opel with Brussels-based investor RHJ International SA.

Officials in Merkel's government have made increasingly clear that they favor the Magna bid.

"As things stand, I view the chances for the financial investor RHJI very critically," Merkel was quoted as telling the daily Frankfurter Allgemeine Zeitung.

"We must find a common solution together with GM," she added. But "our preferences lies clearly with Magna. Magna has experience in car building and the better concept."

"Without doubt, the Russian component definitely makes sense," Merkel said, according to the report. "And I see many chances there."

GM has yet to choose its favored bidder, but has in recent weeks signaled concerns over questions raised by the Magna-Sberbank bid, among them Opel's potential cooperation with Chevrolet in Russia and intellectual property transfer rights in the country.

Economy Minister Karl-Theodor zu Guttenberg told the Financial Times Deutschland newspaper that he expected a "basic assessment" on the bids but it is a "matter for GM" whether it makes a decision yet.

Government spokesman Klaus Vater declined to say whether Germany would accept a decision in favor of RHJI.

"We will wait to see what happens this evening at GM, then we will evaluate it and look at what to do with it, and then we will comment," Vater told reporters in Berlin.

GM's board is expected to hold discussions on Friday, though it was unclear whether it might receive any recommendation on Opel.

Germany is a player because it is offering financial help to make a deal possible.

The government said earlier this week that Germany is prepared to provide in full the euro4.5 billion ($6.4 billion) credit sought for the Magna bid to avoid lengthy negotiations with other European countries that have Opel facilities.

Under a structure created earlier this year to keep Opel out of GM's filing for bankruptcy protection, 65 percent of the carmaker has been formally under the care of a trustee since the beginning of June, with GM holding the remaining 35 percent.

[Associated Press]

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