GM U-Turn Startles

It felt as if negotiations would go on for an eternity, with months of stalling: search this site for ‘Opel bid’ and the stories of stops and starts come thick and fast.  Now, just as it seemed that the deal was finally coming to a close, comes the spectacular announcement that GM will not in fact sell off its loss-making European unit Opel to the consortium of Canadian part-maker Magna and Russia’s Sberbank, preferring to restructure it itself as the economic climate warms. 

German Chancellor Angela Merkel, who had pledged €4.5bn in loans may well be fuming and apparently Prime Minister Putin has chimed in with his consternation over the abortive deal, which had promised to cement Russia-Germany business ties and heralded the overcoming of US Cold-War era fears about sharing technology with its old adversary.  He has reportedly stated that a ‘deep legal analysis of the situation‘ will be undertaken.  The Times reports:

Mr Putin’s spokesman said: “The decision by General Motors arouses surprise in Russia. According to our information the Magna-Sberbank consortium is intending to carry out discussions with General Motors very soon and carry out a deep legal analysis of the situation.” The Russian Government has repeatedly said that the sale of Opel to a Russian-backed group would show the readiness of US President Barack Obama to boost economic ties with Russia.

It is unclear whether GM will be forced to pay a break fee to the Magna/Sberbank consortium after terminating the deal.

Germany, which had been lobbying for Magna and Sberbank to buy theoperations to preserve 25,000 German jobs, today branded GM’s decisionas “totally unacceptable” and demanded details over the US carmaker’splans for the business.

Christine Lieberknecht, the premier of Thuringia state, in which an Opel plant is based, called the decision a”low blow”.