Opel rescue deal dogged by European divisions

• Source: Global Times
• [01:48 October 12 2009]
• Comments

Tempers are rising in Europe over Germany's promise of billions of euros in state aid to support the sale of General Motors' loss-making European unit Opel/Vauxhall.

In a preliminary deal announced in Berlin Saturday, GM is selling a 55 percent stake to Canadian auto-parts maker Magna and Russian state-owned lender Sberbank.

The financing was contingent, however, on other European governments where Opel has plants, providing their own taxpayers' money too.

But instead, the deal has been met with grumbling, with those countries unwilling to stump up cash for a deal that they see as only keeping German plants up and running.

Magna is reported to be looking to take around 10,500 workers off the payroll.

Peter Mandelson, British business secretary, said Thursday he could not "sign off" on the deal in its current form, citing "shortcomings."

Britain, where Vauxhall employs 4,700 people, is ready to provide loan guarantees, but first wants assurances that two plants remain open.

Spain, where Opel employs 7,000 people in Zaragoza province, has also been up in arms.

"We have never been favorable to Magna's offer," a spokesman said Friday, with Industry Minister Miguel Sebastian "pretty unhappy" after the last meeting in the German capital.