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Magna is 'very close' to GM deal Magna 'close' to GM Europe deal
(about 1 hour later)
Canadian car parts maker Magna International is the preferred bidder for GM Europe, owner of Opel and Vauxhall, Lord Mandelson has said. Late-night talks are continuing in Berlin as US and German officials seek a takeover of Opel and Vauxhall, parts of General Motors' European division.
The UK business secretary said a deal between Magna and GM was "pretty near". Talks with a preferred bidder, Canadian car parts maker Magna International, "are going well", Reuters news agency quoted a German official as saying.
The German government is in discussions about whether to approve the deal. Talks are carrying on into the night. Earlier, Magna briefed UK Business Secretary Lord Mandelson, who said a deal was "pretty close".
The other potential bidder, Fiat, did not attend Friday's talks with the German government, saying Berlin's position was "unreasonable". The US parent firm is expected to file for protective bankruptcy on Monday.
Lord Mandelson was speaking after reports that Magna had reached an agreement in principle to rescue GM Europe. General Motors, one of the world's largest carmakers, has been stricken by a collapse in demand for new cars amid the global recession.
GM in the US is expected to declare Chapter 11 bankruptcy on Monday. GM 'lifeline'
Ministers meet General Motors executives successfully agreed a major cost-saving deal with its workers on Friday to pave the way for a major restructuring of its business.
A meeting is underway in Berlin - attended by Chancellor Angela Merkel, other German ministers and officials from the German states that contain GM plants - to discuss whether to approve the offer from Magna. UAW members voted to give GM in the US 'a lifeline'
They made it absolutely clear that they would be committed to continued production by Vauxhall in the UK Lord Mandelson class="" href="/1/hi/business/8072108.stm">Luton waits for Vauxhall news Three-quarters of all United Auto Workers (UAW) union members voted to accept a freeze on pay and an end to bonuses - cutting labour costs by up to $2bn a year, the union said.
It also agreed to cut health benefits to retired employees.
Instead of the company funding health care costs for former workers, the union health trust will do so. The union will take an ownership stake in return for absolving GM of its responsibilities.
UAW also agreed not to strike until 2015 in a bid to shore up the company and save jobs.
"Their shared sacrifices will enable GM to become a stronger, more viable company that will continue to deliver world-class cars and trucks," said Diana Tremblay, GM vice-president of labour relations.
Despite the concessions, 21,000 jobs are expected to be lost and several plants will be closed in the US.
"We've given a lifeline to GM until they can rebound," said Ron Gettelfinger, UAW president.
By 1 June, ownership of the US based business is expected shared between the US government (72.5%), the union's health trust (17.5%) and GM's former creditors.
European negotiations
Mandelson sees 'positive' GM deal
While GM will ultimately choose who buys Opel and Vauxhall, the German government's preference is key because Berlin has pledged the most financial support for the eventual buyer. About half of GM Europe's 50,000 workers are employed in Germany.While GM will ultimately choose who buys Opel and Vauxhall, the German government's preference is key because Berlin has pledged the most financial support for the eventual buyer. About half of GM Europe's 50,000 workers are employed in Germany.
Magna's willingness to put forward bridging finance put them in a better position than Fiat, Lord Mandelson said. The Italian carmaker felt that the German government's request for additional funds was unreasonable. The other potential bidder, Fiat, did not attend Friday's talks with the German government, saying Berlin's position was "unreasonable" though it is not yet clear if Fiat had pulled out altogether.
The BBC's correspondent in Berlin, Tristana Moore, stressed that the deal was not complete.
German officials continued to examine the offer and it was not yet clear if Fiat had pulled out altogether, she said.
UK jobs
Speaking to the BBC, Lord Mandelson said that after Magna tabled its offer, they came to London for a meeting.Speaking to the BBC, Lord Mandelson said that after Magna tabled its offer, they came to London for a meeting.
"They made it absolutely clear that they would be committed to continued production by Vauxhall in the UK," he said."They made it absolutely clear that they would be committed to continued production by Vauxhall in the UK," he said.
"I will be seeking a very early meeting to reinforce that commitment." "It looks as if GM in Europe can be saved. Of course it will involve change, there is excess capacity," Lord Mandelson said.
Asked about what the deal means for jobs in the UK, he said: "It looks as if GM in Europe can be saved, it can be turned around.
"Of course it will involve change, there is excess capacity."
Magna's plansMagna's plans
See GM production centres in EuropeEnlarge MapSee GM production centres in EuropeEnlarge Map
Magna has said it will inject between 500m and 700m euros into Opel, assuming the deal gains government approval.Magna has said it will inject between 500m and 700m euros into Opel, assuming the deal gains government approval.
It also plans to cut 2,500 jobs in Germany, about 10% of Opel's workforce in that country. Fiat had said it would cut 10,000 jobs.It also plans to cut 2,500 jobs in Germany, about 10% of Opel's workforce in that country. Fiat had said it would cut 10,000 jobs.
Under the agreement with Magna, GM would keep a 35% stake in the company, while 10% would be owned by Opel employees.Under the agreement with Magna, GM would keep a 35% stake in the company, while 10% would be owned by Opel employees.
Magna's bid is backed by Russia's state-run Sberbank and Oleg Deripaska's truck firm Gaz. It hopes that GM Europe will gain 20% of the Russian market in the short term.Magna's bid is backed by Russia's state-run Sberbank and Oleg Deripaska's truck firm Gaz. It hopes that GM Europe will gain 20% of the Russian market in the short term.
Magna and GM will also have to make sure that GM Europe is restructured in a way that will protect the carmaker if, as expected, its parent company in the US declares itself bankrupt.Magna and GM will also have to make sure that GM Europe is restructured in a way that will protect the carmaker if, as expected, its parent company in the US declares itself bankrupt.
Also on Friday, a court in Sweden granted Saab, GM's other European business, an extension to its protection from creditors.Also on Friday, a court in Sweden granted Saab, GM's other European business, an extension to its protection from creditors.
The Swedish carmaker first sought protection from creditors in February. It now has until 20 August to line up a new owner and to restructure its business.The Swedish carmaker first sought protection from creditors in February. It now has until 20 August to line up a new owner and to restructure its business.
Saab is being sold off by GM separately.Saab is being sold off by GM separately.
Do you work at any of GM's plants in Europe? What are your hopes for the future of the company. Send us your comments using the form below.Do you work at any of GM's plants in Europe? What are your hopes for the future of the company. Send us your comments using the form below.
The BBC may edit your comments and not all emails will be published. Your comments may be published on any BBC media worldwide. Terms & ConditionsThe BBC may edit your comments and not all emails will be published. Your comments may be published on any BBC media worldwide. Terms & Conditions