4.5 billion euros in aid for Opel to a Magna takeover

Economy minister Karl-Theodor zu Guttenberg expressed confidence on Saturday that Germany could address EU concerns about a sale of carmaker Opel to Canada's Magna, saying they did not put the deal at risk.
 
The European Commission announced late on Friday that competition commissioner Neelie Kroes had written to Guttenberg voicing doubts about Germany's offer to provide 4.5 billion euros in financial aid for Opel as part of the deal with Magna.
 
In the letter, Kroes said there were "significant indications" that Germany had made the aid for Opel contingent on Magna being chosen as the winning bidder -- a stance that would run counter to EU competition rules.
 
Speaking to reporters in Berlin on Saturday morning, Guttenberg said the deal was "on track" and voiced confidence that Germany could resolve the questions raised by Kroes.
 
Asked whether her concerns could doom the sale to Magna, he replied: "No, I don't believe that." Magna, a car parts group whose bid for Opel is backed by Russian investors, had been in competition with private equity investor RHJ International, and before that with Fiat and China's BAIC, for control of the General Motors unit. RHJ was not immediately available for comment.
 
But the German government stated on numerous occasions during the bidding process that it had a "clear preference" for the Magna bid because it offered Opel the most promising future and would safeguard German jobs.
 
It linked its offer of 4.5 billion euros in aid for Opel to a Magna takeover, with chancellor Angela Merkel promising back in August to intervene personally, if necessary, to ensure Magna won the bid battle.
 
Under pressure from Germany, GM chose Magna as its preferred bidder last month. Under a deal that had been expected to be signed this week but was pushed back amid the EU doubts, GM plans to sell a 55 percent stake in Opel to Magna and Russian state-owned bank Sberbank. GM would retain a 35% stake in Opel under the deal and workers would hold the remaining 10%.
 
Kroes said that GM and the trust established to keep Opel separate from its U.S. parent's recent bankruptcy in the United States should be given the chance to reconsider the decision to sell to Magna. "GM and the Opel Trust should be given the opportunity to reconsider the outcome of the bidding process," Kroes said in the statement.
 
If GM is forced to reopen the bidding for Opel, or the closing of the deal faces significant delays, Opel could face a cash crunch based on previous projections by the automaker.
 
Although the European Commission's official term ends this month, Kroes will still be able to take action in cases such as Opel in the interim period before the new EU executive is appointed early next year.