Memo to large suppliers (in any industry): Your customers may love you, but don't compete with them.
The head of BMW delivered that message to the U.S. Embassy in Berlin last year when Magna International Inc. was preparing to take over management control of the European manufacturing operations of General Motors Corp. in a deal orchestrated by the German government.
The Magna-led bid for Adam Opel GmbH angered BMW AG and other Germany-based auto makers so much that they were prepared to pull their business from the Canadian auto-parts giant, according to a memo released as part of the massive dump of confidential U.S. documents by whistle-blowing website Wikileaks.
Norbert Reithofer, BMW's chief executive officer, "was adamant that there was no way BMW and other German auto manufacturers would have purchased auto parts from Magna once it became a director competitor as an auto manufacturer," says a memo from the Berlin embassy to the U.S. Secretary of State's office in Washington.
BMW and Volkswagen AG had complained publicly about the possibility of Magna competing with them by taking over management control of Opel, but the document sheds new light on how the deal could have turned out badly for Magna, which is also a key supplier to the Mercedes-Benz division of Daimler AG.
BMW was Magna's second-largest customer at the time, behind GM, which was careering into Chapter 11 bankruptcy protection in the United States when the rescue effort for Opel began. The three German auto makers accounted for 38 per cent of Magna's $17.4-billion (U.S.) sales in 2009.
"In Reithofer's view, Magna made the Opel purchase proposal in a moment of panic at the height of the economic crisis," but was probably happy it fell apart, the document says, citing a conversation between the BMW CEO and the U.S. Ambassador to Germany, Philip Murphy.
At the time, Magna said it had been asked by GM representatives in Europe to help save Opel and it eventually became the favoured candidate of the German government and Chancellor Angela Merkel.
Ms. Merkel's government anointed the Magna-led bid as Opel's saviour in May after months of negotiations that included a dinner meeting between the German Chancellor and Magna chairman Frank Stronach.
But GM changed its mind on selling off a controlling stake in Opel in November, after emerging from bankruptcy protection. GM's board was worried about the future of its small car development centre in Germany and the issue of intellectual property rights.
Magna's bid was backed by Sberbank of Russia, which was going to split a 55-per-cent controlling stake in Opel. But the bank was planning to flip its stake to OAO Gaz of Russia.
The memo says GM was worried about protecting its intellectual property rights in Russia.
That memo and another document from Wikileaks said Ms. Merkel was infuriated by GM's decision and refused to take telephone calls from then-GM CEO Fritz Henderson.
She later called U.S. President Barack Obama to complain.
"Politicians and others are citing the GM action as another example of American 'turbo-capitalism,'" the second document says.
Both GM and Magna refused to comment on the documents.
Although GM has emerged from protection and has held a successful initial public offering, its European operations are still losing money.
The loss before interest and taxes for the three months ended Sept. 30 deepened to $559-million (U.S.) from $160-million in the three months ended June 30 and $477-million the three months ended March 31.