May 25, 2009 / 12:04 PM / 11 years ago

Germany nears decision on Opel suitors

BERLIN/FRANKFURT (Reuters) - Germany will decide on a preferred bidder for General Motors (GM.N) unit Opel by the middle of the week, after holding a final round of talks with suitors Fiat FIA.MI, Magna MGa.TO and RHJ RHJI.BR.

People work on an assembly belt line at Opel's plant in Gliwice, some 350 km (219 miles) south of Warsaw, May 12, 2009. REUTERS/Peter Andrews

Chancellor Angela Merkel told reporters on Monday that pressure to choose an investor was building ahead of a June 1 restructuring deadline for GM set by the U.S. government, which is expected to lead to a Chapter 11 bankruptcy filing.

“In the middle of this week there will likely be a certain accumulation of pressure to make a decision,” Merkel said.

Canadian car parts group Magna International emerged as the favourite to win Opel last week, but Italian carmaker Fiat has improved its offer. Belgian-listed holding group RHJ International is also bidding.

Several officials familiar with the government’s plans said a decision was likely on Wednesday evening after consultations involving Berlin, GM and the U.S. administration.

“A decision must come by early Thursday at the very latest,” one official, who requested anonymity, told Reuters.

The floundering Opel parent has the final word on who buys Opel, but Germany will also have an important say because it is being asked to cough up billions of euros-worth of loan guarantees as part of any deal.

Opel has 25,000 workers at four plants in Germany and the carmaker’s fate has become a politically charged topic of debate in Berlin ahead of a parliamentary election on September 27.

Union leaders made an appeal to the German government to protect Opel from the effects of any bankruptcy filing by its parent and ensure a deal for the carmaker, which traces its roots in Germany back to the 19th century, was a good one.

“Quality should take precedence over speed,” Opel supervisory board member and regional IG Metall union boss Armin Schild told Reuters. “We need a sustainable solution and must not rush head forth into a deal that proves to be a failure six months later.”

Merkel’s spokesman Ulrich Wilhelm said talks were continuing with all three suitors and the bids were still being improved.

Michael Fuchs, a leader of the business wing of Merkel’s Christian Democrats (CDU) in parliament, said none of the three bidders had presented a sustainable plan yet, and that insolvency must remain an option.

“The takeover plans must be improved significantly. Key issues need to be cleared up,” Fuchs said.

Fiat CEO Sergio Marchionne, who is expected to meet government leaders in Berlin again on Tuesday, said over the weekend that his plan did not foresee cutting more than 2,000 jobs in Germany and saw no need to close any of Opel’s German sites.

Earlier on Monday, Juergen Ruettgers, CDU state premier of North Rhine-Westphalia, where one of Opel’s four German plants is based, said he was pleased Magna had improved its offer to preserve jobs in Bochum.

“It’s good that there is competition to win the bid,” Ruettgers said. “That gives me confidence that there will not be any need for an insolvency.”

Picture shows the headquarters of German car manufacturer Opel in Ruesselsheim May 22, 2009. REUTERS/Johannes Eisele

Economy Minister Karl-Theodor zu Guttenberg said on Saturday that an orderly insolvency was an option as current bids required taxpayers to shoulder too much financial risk — comments swiftly criticised by Vice Chancellor Frank-Walter Steinmeier, the SPD candidate running against Merkel.

Roland Koch, CDU state premier of Hesse where Opel is headquartered, also distanced himself from Guttenberg’s ideas about insolvency, telling reporters in Berlin after a meeting of key leaders to discuss the bids that this was the worst option.

“You can never rule it (insolvency) out, but that would be the worst-possible scenario,” Koch said.

Additional reporting by Kerstin Gehmlich, Noah Barkin and Sarah Marsh; Writing by Erik Kirschbaum; Editing by Hans Peters and Rupert Winchester

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