General Motors Co. and the German government failed to agree on a preferred buyer for Adam Opel GmbH, setting the stage for a standoff between the two sides over the German car maker's future.
At a meeting with GM representatives in Berlin on Wednesday, German officials reiterated the government's preference for a bid from a consortium led by Canadian-Austrian car-parts maker Magna International Inc., which Germany believes would safeguard local factories and jobs.
GM has yet to declare its preference, but people close to the company say it sees a number of advantages in a deal with RHJ International SA, a Brussels-based holding company whose largest shareholder is U.S. financier Timothy Collins, founder and head of buyout firm Ripplewood Holdings. GM would likely have a better chance of buying back Opel in the future, should it so desire, from a financial buyer such as RHJ than from Magna, which has long aspired to become a full-fledged auto maker.
A third bidder, China's Beijing Automotive Industry Holding Co., isn't in serious contention, according to people close to the talks.
A sale would require the approval of the Opel Trust, which holds a 65% stake in the car maker. GM, which still holds a 35% stake in Opel, and the German government are equally represented on the trust's board. That means the two sides would have to broker a settlement to reach a deal.
At Wednesday's meeting, German officials "made clear that we have a preference for Magna," Deputy Economics Minister Jochen Homann told reporters afterward. He added that the government's endorsement is conditional on further concessions, in particular an increased capital commitment by Magna and its Russian partners, auto maker OAO GAZ Group and Russian state-controlled OAO Sberbank.
Magna and the Russians have offered to invest €500 million ($711 million) of their own money in Opel, with €100 million to be paid by the signing of the deal and €400 million in loans, which would gradually be transformed into equity. The consortium is seeking a 55% stake in Opel.
Germany has pledged to support Magna's plan with €4.5 billion in loan guarantees and has signaled that those funds may not be available if GM selects another bidder.
RHJ has offered to invest €275 million for a 50.1% stake in Opel, requesting €3.8 billion in government funding.
Mr. Homann said that GM expressed concerns about the government's preference for Magna but didn't endorse one bidder over another during Wednesday's talks, which lasted four hours. The discussions are expected to resume in the coming days, he said.
