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28 Jul, 2009 18:44

Bidders rev up offers on Opel

Magna has more than tripled its offer to General Motors, for European subsidiary, Opel, from €100 million to €350 million, on Tuesday.

Magna and its Russian partner Sberbank decided to raise their offer after rival bidder, Belgium-based R.H.J., offered €275 million for the German carmaker last week. The Magna-Sberbank consortium had previously earmarked a total spend of €500 million on the deal. That included €100 million for a controlling stake in Opel, with the rest to be invested in production.

Kirill Tachennikov, Senior Analyst at Otkrytie, believes different parties have different preferred buyers.

“For the German government the preferred buyer is Magna – Sberbank, while R.H.J. is the preferred buyer for GM. We think that this is mainly due to the differences in the approach of the deal, because Magna – Sberbank want the GM technologies and want to hold the current employees of Opel, while R.H.J. intends to reduce headcount.”

A year ago America's General Motors, which was going bankrupt, was forced to put its European subsidiaries up for sale, including Opel in Germany.

A joint Sberbank and Magna consortium made a bid, in competition with Italy's Fiat, however, Fiat pulled out of talks in May due to a lack of financing.

In June, China's Beijing Automotive joined the contest for Opel. But Beijing Auto's bid fell out of favour with the German government, because of plans to move some production to China and cut jobs in Germany.

Belgium's RHJ also made an initial €215 million bid for majority control, which it raised again last week. Sberbank chairman, German Gref, said on Tuesday that a final decision on a buyer for Opel could be made this week.