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Fiat boss's last-ditch Opel talks UK considering Vauxhall support
(about 2 hours later)
German Chancellor Angela Merkel has met Fiat boss Sergio Marchionne to discuss his firm's bid to buy Opel from GM. The UK government has "not ruled out making a financial contribution" to help secure the future of carmaker Vauxhall, Peter Mandelson has said.
Her government is also considering a Russian-backed bid from Canada's Magna and one from Brussels-based RHJ, backed by US private equity firm Ripplewood. The comments of the UK Business Secretary came as the three bidders aiming to buy Opel and its UK brand Vauxhall continue to press their case.
It is reported to be holding a meeting on Wednesday evening, after which it will announce a preferred bidder. The three bidders are Fiat, Canada's Magna, and Belgium's RHJ.
The government is being asked to give loan guarantees to the winning bidder, so it has a big say in the process. While owner General Motors will have the final say, the choice of the German government is also crucial.
Meanwhile, UK business secretary Lord Mandelson said that both Fiat and Magna had made "a clear commitment" to Vauxhall - the UK part of GM's European business. This is because Opel has its headquarters in Germany, and 25,000 of the firm's 50,000 workers are employed in the country.
He said that UK had "not ruled out making a financial contribution to securing the future of Vauxhall as part of a long-term commercial plan to stabilise the future of GM in Europe." As a result, the German government is offering the most financial support for the winning bidder.
June deadline The two UK Vauxhall plants at Ellesmere Port and Luton employ 5,000 between them.
German talks
German Chancellor Angela Merkel met Fiat boss Sergio Marchionne on Tuesday to discuss his firm's bid to buy Opel from GM.
Opel's possible buyers
Her government is now expected to hold a meeting on Wednesday evening, after which it will announce its preferred bidder.
A Fiat spokesman said that Mr Marchionne and Ms Merkel had discussed the bid for an hour.A Fiat spokesman said that Mr Marchionne and Ms Merkel had discussed the bid for an hour.
The RHJ and Magna consortia are expected to meet employee representatives from Opel on Tuesday to explain their plans. While Fiat was talking to the German government, the RHJ and Magna consortia met employee representatives from Opel to explain their plans.
As it is a German election year, the German government is likely to favour offers that limit the number of job cuts.As it is a German election year, the German government is likely to favour offers that limit the number of job cuts.
GM debt talks
The sale of GM's European units is part of the reorganisation of the carmaker, which is battling to avoid bankruptcy.The sale of GM's European units is part of the reorganisation of the carmaker, which is battling to avoid bankruptcy.
href="/1/hi/business/8063539.stm">Opel's possible buyers The government's biggest concern is the future of GM's Vauxhall's plants in the UK Martin Shankleman href="/1/hi/business/8068541.stm">Vauxhall's uncertain future
GM faces a 1 June deadline to either restructure its debt or file for bankruptcy, and some newspapers are reporting that it will take the same option as its rival Chrysler and file for Chapter 11 bankruptcy protection.GM faces a 1 June deadline to either restructure its debt or file for bankruptcy, and some newspapers are reporting that it will take the same option as its rival Chrysler and file for Chapter 11 bankruptcy protection.
If it is to avoid bankruptcy, the carmaker will need to reach agreement with its bondholders. It is reported to want to secure the sale of Opel and Vauxhall before that date.
If GM is to avoid bankruptcy, the carmaker will need to reach agreement with its bondholders.
GM has set a deadline of midnight EDT on Tuesday (0400 GMT on Wednesday) for agreement from the bondholders.GM has set a deadline of midnight EDT on Tuesday (0400 GMT on Wednesday) for agreement from the bondholders.
It has proposed giving the bondholders a 10% stake in the company while giving 50% to the US Treasury.It has proposed giving the bondholders a 10% stake in the company while giving 50% to the US Treasury.
The existing shareholders would end up with an extremely small stake in the company under the plans.The existing shareholders would end up with an extremely small stake in the company under the plans.