General Motors Co.'s board is considering all options for its German Opel unit, including rejecting two pending bids and keeping it as a wholly owned subsidiary, a person familiar with the discussions said.
The board yesterday reviewed bids from Brussels-based RHJ International SA and Aurora, Ontario-based Magna International Inc. without taking action. New GM directors, dominated by members who joined after a U.S.-backed bankruptcy, are also considering keeping or dissolving Opel, said the person, who didn't want to be identified because the talks aren't public.
Keeping Opel under GM would reverse six months of talks at the request of the German government asking the Detroit automaker to give up a majority stake to outside investors in exchange for loans it needed to survive. GM, which had run Opel since 1929, turned over control to a German-led trust when the company filed for U.S. bankruptcy protection in early June.
"GM is in a lot better shape than they were back in February," said Rebecca Lindland, a forecaster at IHS Global Insight Inc. in Lexington, Massachusetts. "Maybe that gives them more confidence to reconsider the decision."
The company cut $40 billion in debt during the 40-day court-sponsored reorganization and is slashing its eight U.S. brands to four, including selling off the Saab, Hummer and Saturn brands and shutting Pontiac.
No Decision
The new 13-member board had already held one meeting, on Aug. 4, without an Opel decision. The board opted not to take action again after a meeting yesterday, GM said in a statement.
Opel may still end up going to Magna, because its offer is supported by the German government.
German Chancellor Angela Merkel, faced with rising unemployment as national elections loom on Sept. 27, prefers the bid by Magna, believing it will secure more German jobs. Her government is seeking to protect employees of Ruesselsheim-based Opel as Germany emerges from its worst recession since World War II. GM Europe employs about 25,000 people in Germany.
Steffen Moritz, a spokesman for the German Economy Ministry reached by phone yesterday after business hours, had no immediate comment. Tracy Fuerst, a Magna spokeswoman, declined to comment on the situation in an e-mail today.
GM is weighing whether it still makes sense to give up control of Opel, a decision made before it successfully emerged from bankruptcy and conditions in Europe improved, two people familiar with the discussions said. A stake sale is still the more likely option, with insolvency the least favorable, said the people, who asked not to be identified because the deliberations aren't public.
