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Germany picks Magna to save Opel Germany picks Magna to save Opel
(about 3 hours later)
Germany has agreed a deal with Magna International, a Canadian car parts maker, to take over Opel, part of the European wing of US carmaker GM.Germany has agreed a deal with Magna International, a Canadian car parts maker, to take over Opel, part of the European wing of US carmaker GM.
Talks in Berlin continued into early Saturday before Germany's finance minister announced a deal.Talks in Berlin continued into early Saturday before Germany's finance minister announced a deal.
The German government is expected to provide an immediate loan facility of 1.5bn euros ($2.1bn, £1.3bn).The German government is expected to provide an immediate loan facility of 1.5bn euros ($2.1bn, £1.3bn).
But 2,500 jobs in Germany could be lost and a UK minister has accepted "there is excess capacity" in GM's operations.But 2,500 jobs in Germany could be lost and a UK minister has accepted "there is excess capacity" in GM's operations.
Opel ring-fenced
Finance Minister Peer Steinbrueck told journalists outside the chancellery shortly after 0200 local time on Saturday that a deal had been agreed.Finance Minister Peer Steinbrueck told journalists outside the chancellery shortly after 0200 local time on Saturday that a deal had been agreed.
"We have an agreement," said Mr Steinbrueck, the AFP news agency quoted him as saying, following six hours of talks between German politicians, US government officials and executives from GM and Magna. "A solution has been found to keep Opel running," said Mr Steinbrueck, after six hours of talks between German politicians, US government officials and executives from GM and Magna.
Magna, backed by a Russian bank and truckmaker, has said it will put more than 500m euros ($700m; £435m) into Opel. GM operations in Europe will be placed under the care of a trustee to shield them from the parent company's filing for bankruptcy protection which is expected early next week.
General Motors, Opel's current parent company, is expected to file for bankruptcy protection in the US in the next few days. The BBC's Steve Rosenberg, in Berlin, says the Germans wanted to ringfence Opel from the mother company and this has been achieved.
The talks in Berlin were aimed at securing the future of Opel, which employs more than 25,000 people in Germany. It is a key breakthrough and quite surprising considering a few hours before the situation looked quite hopeless with Fiat walking away from the bid and Magna appearing to get cold feet, our correspondent adds.
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, backed by a Russian bank and truckmaker, has said it will put more than 500m euros ($700m; £435m) into Opel which employs more than 25,000 people in Germany.
It also plans to cut 2,500 jobs in Germany, about 10% of Opel's workforce in that country. Italy's Fiat, a former potential bidder, had said it would cut 10,000 jobs. Before the announcement of the deal Magna said it planned to cut 2,500 jobs in Germany, about 10% of Opel's workforce in that country. Italy's Fiat, a former potential bidder, had said it would cut 10,000 jobs.
See GM production centres in EuropeEnlarge MapSee GM production centres in EuropeEnlarge Map
Details of the final deal have not yet been released, but the terms of the agreement are thought to involve GM keeping a 35% stake in the company, while 10% would be owned by Opel employees.Details of the final deal have not yet been released, but the terms of the agreement are thought to involve GM keeping a 35% stake in the company, while 10% would be owned by Opel employees.
Magna's bid has been 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 has been 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.
Correspondents say 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.
On Friday, a court in Sweden granted Saab, GM's other European business, an extension to its protection from creditors.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 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 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.
About half of GM Europe's 50,000 workers are employed in Germany, with significant numbers spread around Sweden, Poland, the UK.About half of GM Europe's 50,000 workers are employed in Germany, with significant numbers spread around Sweden, Poland, the UK.
UK Business Secretary Lord Mandelson has said Magna has given a "clear commitment" to continuing UK production of Opel cars, which are branded as Vauxhall for British customers.UK Business Secretary Lord Mandelson has said Magna has given a "clear commitment" to continuing UK production of Opel cars, which are branded as Vauxhall for British customers.
GM 'lifeline'GM 'lifeline'
In the US, General Motors executives on Friday successfully agreed a major cost-saving deal with workers in an effort to pave the way for a major restructuring of its US-based business.In the US, General Motors executives on Friday successfully agreed a major cost-saving deal with workers in an effort to pave the way for a major restructuring of its US-based business.
UAW members voted to give GM in the US 'a lifeline' Magna has received Berlin's approval to take over Opel from GM
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.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.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.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.UAW also agreed not to strike until 2015 in a bid to shore up the company and save jobs.
Despite the concessions, 21,000 jobs are expected to be lost and several plants will be closed in the US.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."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 to be shared between the US government (72.5%), the union's health trust (17.5%) and GM's former creditors.By 1 June, ownership of the US based business is expected to be shared between the US government (72.5%), the union's health trust (17.5%) and GM's former creditors.
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