Germany to decide who gets Opel

Stephen Beard May 26, 2009
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Germany to decide who gets Opel

Stephen Beard May 26, 2009
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Kai Ryssdal: Gernam Chancellor Angela Merkel met with the CEO of Fiat today. The Italian car company is one of four bidders for Opel. That’s the troubled German subsidiary of the equally troubled General Motors. Also in the running for Opel are the Canadian auto-parts company Magna, the European private equity group RHJ International, and a late entry from China, the Beijing Automotive Industry Corporation. The German government holds another meeting tomorrow to pick a lucky winner as Marketplace’s Stephen Beard reports.


STEPHEN BEARD: The formal decision will be made in America. GM and the U.S. administration will give their blessing to the successful suitor. But in effect it’s the German government that will really decide. Because the Germans have put together a kind of dowry, a package of loan guarantees for Opel worth over $2 billion. David Bailey of Coventry University Business School.

DAVID BAILEY: The German government is providing the cash to make sure any bidder can continue in business. So the German government is looking at how many jobs can safeguarded in Germany and whether plants will be kept open in Germany.

There are 25,000 German jobs at stake, and with a general election later this year, that’s a particularly sensitive issue. It may dash Fiat’s hopes of winning the prize. Professor Ferdinand Dudenhoffer is with Duisberg University. He says the fact that Fiat is a rival European carmaker is a disadvantage.

FERDINAND DUDENHOFFER: We have the fear that Fiat has to cut more jobs because FIAT and Opel both have over-capacities. And they are in the same market area.

The Belgian-based investment firm RHJ seems a non-runner. And the Chinese contender is thought to have entered the race too late. That says Dudenhoffer leaves the Canadian car-part maker, Magna.

DUDENHOFFER: I think Magna has the best chances. And Magna will be the preferred bidder for Opel.

Magna has no plants already in Europe. It will pump in $1 billion of its own money and has pledged to create more jobs.

In London, this is Stephen Beard for Marketplace.

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