I gave a talk at a conference today and we released the white paper on Singapore so frankly I’m getting to this later than it would normally take to respond.
I believe Magna is one of those cases I have spoken about in the past of premature contractualisation. In other words, the fireworks around the deal and the necessity to get the announcement of the deal out were in some ways, politically at least, almost as important as the deal itself. What GM cannot take away is that Vladimir Putin managed to significantly impact German domestic politics through the announcement of this deal. Further, Frank Stronach of Magna has earned more Putin points than he can count and therefore there can be little question that when the Russian economy revives, Magna will find itself in a preeminent position. The key Russians involved in this deal had doubts from day one as to whether, given the timing, it made sense. So however hard Putin huffs and puffs, the present situation that Renault finds itself in is an object lesson on the risks of listening to Vlad. If anything, it appears the reset button does not completely obfuscate either political or economic realities.
The Washington Post quoted Stronach’s daughter and Vice-Chairwoman of the company as saying the following:
“We’ve valued our relationship with GM for more than 50 years,” said Belinda Stronach, vice chairman of Magna and daughter of the founder. “While we were disappointed in hearing the news yesterday, we also respect the decision that the board made.”
“The good news is we have extra cash,” she added.
Stronach said that Magna, which had stressed opportunities for Opel in Russia, still believed that “there are great opportunities to expand within the Russian market.”
According to the Financial Post, shareholders were happy about the news too, no doubt for this among other reasons.