GM says no more talks with Beijing Auto on Opel

General Motors Co. said Thursday it is no longer in talks with China's Beijing Automotive Industry Holding, or BAIC, about the sale of its European unit Adam Opel GmbH, leaving auto supplier Magna International Inc. and Belgian holding company RHJ International SA still in the race.

"We have agreed to continue detailed talks with both Magna and RHJI to secure Opel's future," GM said in a statement.

BAIC declined to comment on GM's announcement.

GM and the German government, which has pledged to guarantee loans for an acquisition of Opel in the early stages, will now enter talks and are expected to announce a decision on the sale of Opel next week. But the two sides are at a standoff having failed to agree on a preferred buyer Wednesday.

The German government has repeatedly voiced support for Magna's takeover plan for Opel, and is being backed by powerful German labor union IG Metall, which thinks RHJ is looking at Opel as a short-term profit-making opportunity. 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.

BAIC's preliminary offer for Opel, including the U.K. Vauxhall operations, was EUR660 million for a 51% stake. It had asked for EUR2.64 billion in German government guarantees, but was always seen as the least favored bidder.

Magna and Russian partners, auto maker OAO GAZ Group and Russian state-controlled OAO Sberbank, have offered to invest EUR500 million of their own money in Opel in return for a 55% stake, with EUR100 million to be paid by the signing of the deal and EUR400 million in loans, which would gradually be transformed into equity.

The German government has pledged to support Magna's plan with EUR4.5 billion in loan guarantees and has signaled that those funds may not be available if GM selects another bidder.

RHJ, whose largest shareholder is U.S. financier Timothy Collins, head of buyout firm Ripplewood Holdings, has offered to invest EUR275 million euros for a 50.1% stake in Opel, requesting EUR3.8 billion euros in government funding.

Westdeutsche Allgemeine Zeitung reported Wednesday that RHJ sweetened its bid and offered the EUR275 million in funding upfront upon signing a takeover contract, compared with a previous proposal that it would not be fulfilled until the end of 2012.