Magna says no more takeovers planned
Will focus back on making auto parts
Last Updated: Thursday, November 5, 2009 | 6:21 PM ET
CBC News
Magna International said Thursday it has no further plans for takeovers now that the deal to acquire Opel is off.
Co-CEO Don Walker told analysts in a conference call that Magna got involved with Opel at the request of the German government in "a fairly unique set of circumstances."
He said the Aurora, Ont.-based company was "not looking at any other transactions" and planned to focus back on its core business of making automobile parts.
Thousands of the 25,000 employees from Opel's four German factories vent their frustration and anger Thursday at GM's decision not to sell the division to Magna. (Michael Probst/AP Photo) The comments came on the day thousands of Opel workers walked off their jobs to protest against General Motors's decision to kill the sale of GM's European division to Magna International.
The workers held a mass rally outside Opel's headquarters in Ruesselsheim, in central Germany.
Many of the 25,000 employees at Opel's four German factories fear widespread layoffs.
GM announced Nov. 3 that despite months of negotiations, it had decided not to sell Opel to Magna and its partner, Russian lender Sberbank.
It said business conditions had improved and it would now reorganize Opel and keep it as a division of GM. German and Russian leaders both questioned the decision, with Russian Prime Minister Vladimir Putin accusing GM of an "arrogant attitude" in abandoning months of talks.
'Our trust is now zero'—Klaus Franz, Head of Opel's Employee Council
"Our trust [in GM] is now zero, and that is the heart of the problem," Klaus Franz, the head of Opel's employee council, told protesting workers. "We will stand together and fight for our future. We will not be defeated, we are proud, we are Opel."
Smaller rallies were being held at factories in Bochum, Eisenach and Kaiserslautern.
German officials said they plan to recover by Nov. 30 a $2.2 billion US bridge loan granted to GM to keep Opel alive while a buyer was found.
Union officials in Britain and Poland supported GM's decision, fearing a Magna takeover would have meant more layoffs at their plants.
GM has raised the possibility of bankruptcy if it doesn't get concessions needed for its own restructuring plan. "Stop the talk about insolvency — that is damaging to the business," Franz said.
GM may tap taxpayer funds for restructuring
At the same time, GM CEO Fritz Henderson said it might use some of the $50 billion in U.S. government aid to finance the Opel restructuring. But Henderson said that would be a last resort, in the event it could not cover the cost through loans from European countries, Opel's own earnings and by reducing royalties that Opel pays GM for the use of technology. GM estimates it needs to raise $4.5 billion.
Magna, which keeps its books in U.S. dollars, reported third-quarter earnings of $51 million, or 45 cents per share, Thursday.
It was able to achieve a profit, despite a 14.5-per-cent drop in revenue compared with a year earlier, by cutting costs. In the same period in 2008, Magna reported a loss of $215 million, or $1.93 per share.
Magna shares initially rose after the GM announcement. On Thursday, the shares gave back some of that gain, closing down 27 cents to $47.07.
With files from The Associated Press
