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Magna 'agrees to buy GM Europe' Magna is 'very close' to GM deal
(40 minutes later)
Canadian car parts maker Magna International has reached an agreement in principle to rescue GM Europe, owner of Opel and Vauxhall, reports say. Canadian car parts maker Magna International is the preferred bidder for GM Europe, owner of Opel and Vauxhall, Lord Mandelson has said.
The agreement was reached with General Motors, but will need to be approved by the German government, which will provide funding to the new owner. The UK business secretary said a deal between Magna and GM was very near.
The other potential bidder, Fiat, said it would not attend Friday's talks with the German government. He was speaking after reports said Magna had reached an agreement in principle to rescue GM Europe.
The other potential bidder, Fiat, did not attend Friday's talks with the German government, saying Berlin's position was "unreasonable".
GM in the US is expected to declare Chapter 11 bankruptcy on Monday.GM in the US is expected to declare Chapter 11 bankruptcy on Monday.
There is due to be a meeting in Berlin at 1800 local time (1600 GMT) attended by Chancellor Angela Merkel, the ministers involved and officials from the German states that contain GM plants to discuss whether to approve the deal. There is currently a meeting in Berlin attended by Chancellor Angela Merkel, the ministers involved and officials from the German states that contain GM plants to discuss whether to approve the deal.
Extra fundingExtra funding
Magna and GM will not attend the meeting at first, although they may be invited later.
See GM production centres in EuropeEnlarge MapSee GM production centres in EuropeEnlarge Map
There have been suggestions in the German media that it may be cheaper for the German government to allow GM Europe to declare itself insolvent than to allow it to be bought.There have been suggestions in the German media that it may be cheaper for the German government to allow GM Europe to declare itself insolvent than to allow it to be bought.
On Thursday, the German government criticised the US Treasury and General Motors after being told at the last minute that GM Europe would need another 300m euros ($415m; £260m) in short-term funding.On Thursday, the German government criticised the US Treasury and General Motors after being told at the last minute that GM Europe would need another 300m euros ($415m; £260m) in short-term funding.
It has already offered almost 1.4bn euros in loan guarantees.It has already offered almost 1.4bn euros in loan guarantees.
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.
Magna's plansMagna's plans
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.
It is not known what its plans for Vauxhall's plants in Luton and Ellesmere Port in the UK are.It is not known what its plans for Vauxhall's plants in Luton and Ellesmere Port in the UK are.
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.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.It hopes that GM Europe will gain 20% of the Russian market in the short term.