How the 500m euro Magna sale was done

Sep 17 2009 By Chester Chronicle

MAGNA international will invest 500m euros to become the majority owner of General Motors’ European operations.

The Canadian car parts firm, which is being backed by the Russian bank Sberbank, will acquire a 55% stake in Opel and Vauxhall.

As part of the deal General Motors will retain a 35% interest with the workforce acquiring 10% as part of a new labour framework.

The Opel Trust, comprising GM and German Government representatives, confirmed that Magna was its preferred bidder at a Press conference on Thursday.

Following the announcement, the consortium of Magna and Sberbank, who will each own half of the 55% stake, committed to keeping open the Ellesmere Port plant.

It also confirmed that it would continue production of the Vivaro van at Luton until 2013 at least.

Beyond 2013, when the contract with Renault is due to expire, the consortium said it would consider economically viable ways of keeping the Luton plant open.

Having already lent Magna 1.5bn euros, the German Government will provide an additional 3bn euros in loan guarantees.

The firm has agreed to keep all four German plants open.

GM President and CEO Fritz Henderson said: "The hard work over the past two weeks to clarify open issues and resolve details in the German financial package brought GM and its board of directors to recommended Magna/Sberbank.

"We thank all parties involved in the intensive process of the last few months - especially the German government - for their continued support.

"I’d also like to thank the Opel and Vauxhall customers for their continued loyalty.

"GM will continue to closely collaborate with Opel and Vauxhall to develop and produce more great cars, such as the new Insignia and the new Astra."

Opel Supervisory Board Chairman Carl-Peter Forster said: "We are happy that this solution has been found following intensive talks, and are looking forward to our collaboration.

"With Magna we have a partner who knows the automotive business and who offers our company excellent future prospects."