General Motors Co. could retreat from a decision to sell its Opel unit to a group led by Magna International Inc. after the European Union said the German government may have improperly favored the bid, according to a person familiar with the situation.
GM hasn't ruled out reconsidering a September board recommendation to accept an offer from Canadian car-parts maker Magna and Russian partner OAO Sberbank, said the person, who asked not to be identified because the company's deliberations aren't public. A decision hasn't been made and GM may still pursue the sale, the person said.
The EU is challenging the deal, saying it's concerned that Germany may have influenced the outcome by agreeing to back Magna's purchase with 4.5 billion euros ($6.7 billion) in loans and guarantees. Before accepting Magna's bid, GM had also considered keeping Opel or allowing the Ruesselsheim, Germany- based carmaker to become insolvent.
"We've gone down the road so far with regards to a Magna agreement, it would really be stealing defeat from the jaws of victory if this were to be overturned by Brussels," said Michael Robinet, a market analyst for CSM Worldwide in Northville, Michigan. "If Opel were to move into disrepair, it would have more of a financial impact on the member states than any imbalance in the existing deal."
GM Chief Executive Officer Fritz Henderson told the Financial Times in an interview that he's still "reasonably confident" the Detroit-based company will sign an agreement with Magna this week. Chris Preuss, a GM spokesman, confirmed the CEO's comments.
Full story
