GM board to reconsider Opel in early November

General Motors will decide in early November whether to proceed with a deal to sell its European arm Opel to a group led by Canada's Magna or to seize a new opportunity to keep the unit after seven months of grinding negotiations.

GM's chief Opel negotiator, John Smith, said on Friday that the automaker's board of directors would reconsider the sale at its next regular meeting on November 3.

The announcement dashed expectations that the long-awaited sale of a 55-per cent stake in Opel could be signed as soon as this week and opened the door for GM's board to set a new course for recapitalising its loss-making European unit.

GM emerged from a US government-sponsored bankruptcy in July with $50 bn in taxpayer funding, and a new board vetted by the US Treasury that has pushed management to reverse the long-running slide in sales in its home market.

In September, GM's 13-member board agreed to sell control of Opel after ruling out the option of raising the $6 bn in cash consultants said would be needed to keep the unit.

But European Union regulators have asked GM to confirm it would make the same decision knowing that 4.5 bn euros ($6.75 bn) in state aid promised by Germany would go to any buyer of Opel, not just Berlin's favoured bidder, Magna.

German Economy Minister Karl-Theodor zu Guttenberg has asked GM to confirm that the automaker chose Magna for business and not political reasons.

GM's Smith said that request would now go the board, a sign of the increased scrutiny by GM's new slate of directors.

"Given the significance of the Opel transaction, GM's board will soon meet in its regularly monthly meeting to consider Minister zu Guttenberg's letter and changes to the Magna / Sberbank proposal that have occurred since its last review on September 9," Smith said in a blog posted by GM.

Magna had no comment.