GM kills Magna purchase of Opel, Vauxhall
Last Updated: Tuesday, November 3, 2009 | 10:37 PM ET
CBC News
The board of General Motors Co. has killed the plan to sell its European divisions, Opel and Vauxhall, to Canada's Magna International.
The decision announced Tuesday ends months of negotiations by Aurora, Ont.-based parts maker Magna and its partner, Russian lender Sberbank.
GM's board has killed the Magna-Opel deal "Given an improving business environment for GM over the past few months, and the importance of Opel/Vauxhall to GM's global strategy," the automaker said in a statement, "the GM board of directors has decided to retain Opel and will initiate a restructuring of its European operations in earnest."
The automaker said it will soon present its own plan for restructuring the divisions to Germany and other governments. It estimates the cost of that restructuring will be $4.7 billion Canadian, which it said was "significantly" less than any of the offers submitted by bidders.
"We understand the complexity and length of this issue has been draining for all involved," chief executive Fritz Henderson said,
"However, from the outset, our goal has been to secure the best long-term solution for our customers, employee, suppliers, and dealers, which is reflected in the decision reached today. This was deemed to be the most stable and least costly approach for securing Opel/Vauxhall's long-term future."
GM promised to work with all European labour unions to develop a plan for meaningful contributions to Opel's restructuring.
"While strained, the business environment in Europe has improved." Henderson said.
"At the same time, GM's overall financial health and stability have improved significantly over the past few months, giving us confidence that the European business can be successfully restructured."
In September, GM chose Magna and Sberbank over a bid from Brussels-based private equity firm RHJ International.
