General Motors Co. will not seek to buy back majority control of Adam Opel GmbH from Magna International Inc. or any other buyer of the European company after it has been restructured, GM's chief negotiator for the Opel deal said Wednesday in his second successive blog posting updating the status of the transaction.
The update by GM group vice-president John Smith came on the same day that the German government fired a shot at GM as the Detroit auto maker studies bids by Magna and Belgium-based investment firm RHJ International, the two suitors for Opel.
"An agreement by GM with one of the two remaining investors would not be enough," Ulrich Wilhelm, chief spokesman for German Chancellor Angela Merkel was quoted by media in Germany as saying yesterday. "Federal and state governments have to be in a position to support such an agreement."
Those comments in turn, came one day after Mr. Smith's first blog posting on the bidding process, which said issues of intellectual property rights and GM's Russian operations meant GM "simply could not execute the deal as submitted" by Magna.
At stake is Magna's effort to leap into the ranks of the full-fledged car companies engaged in design and vehicle development through to sales and marketing, a step up from its status as one of the world's largest auto parts makers and a manufacturer of vehicles on a contract basis for auto companies.
If the bid being led by Magna is successful, the company founded in a Toronto garage in 1957 by Frank Stronach will hold 27.5 per cent of Opel. Sberbank of Russia will own an equal amount, while Opel employees will hold 10 per cent and GM will retain 35 per cent.
Magna is proposing to invest about €500-million ($765-million) and is seeking financial support of about €4.5-billion from Germany.
Mr. Smith said GM has not chosen a preferred bidder, but in his Tuesday blog posting, he described the RHJ bid as "easier to implement" and containing a much simpler structure than the Magna offer.
Both the German federal government and several states have made it clear that they prefer Magna, which also has the backing of Opel's largest unions.
Germany has taken the lead in the negotiations because Opel's headquarters is in that country as are four assembly plants and about 25,000 of the auto maker's 55,000 jobs.
But the key is Russia, which Magna views as one of the key growth markets in the next decade.
As part of the Opel deal, Magna has sought the right to sell Chevrolet models in Russia. Chevrolet outsells Opel in Russia, which represents one of the largest markets in Europe for the Chevrolet brand, one of four brands that will remain when GM's restructuring is completed.
But Mr. Smith said GM has partners in Russia that have joint ownership of some of its assets in that country, including assembly plants that are joint ventures with two Russian auto makers and produce Chevrolet models.
With files from Bloomberg News