DEALTALK-Opel sale is latest deal undone by recovery

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By Quentin Webb

LONDON, Nov 4 (Reuters) - The abruptly scrapped sale of GM's Opel is not the first example of a deal born of the financial crisis being undone by the economic recovery, and probably won't be the last.

General Motors [GM.UL] on Tuesday unexpectedly called off the long-running sale of Opel, citing improving business conditions and the European unit's strategic importance. [ID:nL4519517]

This and earlier reversals, such as Rio Tinto Ltd/Plc's (RIO.L) (RIO.AX) abandonment of a tie-up with China's Chinalco and Lloyds Banking Group Plc's (LLOY.L) manoeuvring to avoid a UK government insurance scheme, are a mirror image of what happened during the crisis.

Then, the rationale for many transactions, the confidence to do them and funding all evaporated, leading to a record number of withdrawn deals in 2008. Some spurned targets even sued, trying to force former suitors to complete takeovers.

Now the opposite rationale applies: world stocks .MIWO00000PUS are up more than 60 percent from a March low and the International Monetary Fund says a global economic recovery could start this year. [ID:nLN394675]

Executives feel less trapped because equity and debt markets are opening up for many firms and are more confident about future business performance.