Finish line nearing for Opel bailout?

Employees of the sputtering German automaker are trying to come up with enough cash to make their own bid.

Johannes Eisele/Reuters
A 1937 Opel is displayed outside the Opel plant in Ruesselsheim, Germany on Friday.

BERLIN – The bids are in for Germany’s beleaguered carmaker Opel. Now, the government here in the coming days will decide which one of three potential investors to back.

As expected, iconic Italian carmaker Fiat made its official non-cash bid for Opel, a subsidiary of Detroit giant GM, Wednesday (Fiat has already acquired a majority stake in Chrysler – to view a recent Monitor story on Fiat, click here). Also in the running is Magna, a Canadian car parts manufacturer, and RHJ International, a Dutch division of a US private equity fund.

The German government is scrambling to make a quick decision, which could come as soon as early next week. On Wednesday evening, lawmakers set up a special “Opel task force” to weigh all three bids.

“We do not have much time,” Labor Minister Olaf Scholz told Agence France Presse.

Ultimately, Opel’s fate rests with GM. But the German government’s opinion in the matter is seen as key, since any deal for Opel is going to involve hefty loan commitments from Berlin – as much as $9.3 billion, according to some estimates (for recent Monitor coverage of Germany's auto woes, look here).

Of the three bidders, Fiat enjoys the name recognition most closely associated with cars. The Italian company is making a play for both Opel and Britain’s Vauxhall, also owned by GM. If successful, it would become the second largest car manufacturer in the world behind Japan’s Toyota.

Magna is bidding in cooperation with Russian automaker GAZ and Sberbank, Russia’s top state-backed lender. Although primarily a manufacturer of car parts, Magna does build vehicles for a number of different automakers through its Austrian contracting firm Magna Steyr.

RHJ International, owned by US private equity fund Ripplewood, is perhaps the least known player in this deal, and has so far kept its intentions for Opel close to its vest.

German news magazine Der Spiegel reported Thursday that internal rankings obtained from GM suggest that the Detroit’s top carmaker is leaning towards Magna as the best choice for its European businesses, with Fiat coming in last out of the three bidders.

Meanwhile, Opel employees announced this week that they have come up with a “plan B” that could help save their employer. Opel’s work’s council told Germany media that employees have agreed to wage cuts that would net $1.4 billion in savings, enough to buy a significant, though not majority, stake in GM.

Speaking to the Frankfurt Allgemeine Zeitung, Klaus Franz, the head of the work’s council, said, “If all else fails, Opel's employees and dealers will present their own offer.”

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