GM board decides to keep Opel

Robert Snell / The Detroit News

General Motors Co.'s board of directors Tuesday voted to retain its German carmaker, Adam Opel GmbH, instead of selling it to Canada's Magna International Inc. and its Russian partner, Sberbank.

The board based its decision, in part, on an improved business environment in Europe and GM's overall financial health and stability since emerging from bankruptcy court after receiving about $50 billion in federal aid.

Those two factors gave GM confidence "that the European business can be successfully restructured," President and CEO Fritz Henderson said in a prepared statement.

Since emerging from bankruptcy court, GM is not barred from spending some of the $50 billion in federal aid it has received from the U.S. government on its overseas units.

"We understand the complexity and length of this issue has been draining for all involved," Henderson said. "However, from the outset, our goal has been to secure the best long-term solution for our customers, employees, suppliers and dealers, which is reflected in the decision reached today. This was deemed to be the most stable and least costly approach for securing Opel/Vauxhall's long-term future."

GM will submit a restructuring plan soon to Germany and other governments that could involve cutting about 10,000 jobs and slashing structural costs by about 30 percent.

The vote ends a protracted negotiation that started earlier this year.

Under the terms of the deal agreed with Magna and Sberbank, they would each get a 27.5 percent stake in Opel, based in Ruesselsheim. GM would keep 35 percent, and employees would get 10 percent.

Previous bidders and interested parties included Fiat SpA, Belgium-based industrial holding company RHJ International and Beijing Automotive Industry Corp.

But the proposed deal triggered concern from a European Union commissioner that GM's choice of bidder may have been limited by the German government's apparent decision to offer financial aid only if Opel was sold to Magna and Sberbank.

Over the last two months, GM has tried to resolve several outstanding issues, such as labor-cost reductions and financing details.

Now that the deal has been rejected, GM plans to incur about $4.4 billion in restructuring expenses, which is much less than amounts proposed by all Opel bidders, GM said today.

GM said it would work with European labor unions to develop a plan for "meaningful contributions to Opel's restructuring."

rsnell@detnews.com (313) 222-2028