GM board scraps sale of European Opel unit

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By Jeff Green and Katie Merx BLOOMBERG NEWS

DETROIT | General Motors Co.'s board voted to keep its Opel division rather than sell a majority stake to Magna International Inc. and partner OAO Sberbank, citing an improving economy and the brand's strategic importance.

The decision sets aside an agreement to sell 55 percent of Ruesselsheim, Germany-based Adam Opel GmbH to Magna, Canada's largest maker of car parts, and Sberbank, Russia's biggest lender. GM expects about $4.42 billion in expenses to restructure the unit and its United Kingdom twin Vauxhall.

German Chancellor Angela Merkel had lobbied for the sale to Magna since May, aiming to preserve jobs. GM directors accepted Magna's proposal in September even after executives called a competing bid from Brussels-based investment firm RHJ International SA "simpler."

"By keeping it, they gain in terms of lowering risk on technology and platforms, but they lose in terms of exposure to a European market that next year could be somewhat weaker," said Michael Robinet, an analyst for CSM Worldwide in Northville, Mich.

GM had cited concern that selling Opel would give competitors access to vehicle designs that the Detroit-based automaker still planned to use after unloading a majority stake.

Magna had no comment on GM's news, said Tracy Fuerst, a spokeswoman.

"GM will soon present its restructuring plan to Germany and other governments and hopes for its favorable consideration," Chief Executive Officer Frederick A. "Fritz" Henderson said in a statement.

Opel has about 50,000 employees across Europe. Germany is home to four Opel plants and half of the carmaker's work force, while 5,000 people work in the United Kingdom for Vauxhall.