Germany steps up pressure on GM on Opel, favoring Magna bid

A traffic sign shows the way to the Opel plant in Ruesselsheim July 14, 2009.    

German officials stepped up pressure on General Motors Co. to come to a decision on its Opel unit, with state premiers rejecting a possible sale to investor RHJ International SA in favor of Magna International Inc.

Foreign Minister Frank -Walter Steinmeier spoke by phone Friday with GM Chief Executive Officer Fritz Henderson, ministry spokesman Amelie Utz said Saturday, without saying what they discussed. The prime ministers of the states of Hesse and Thuringia said they would only support Magna’s bid.

“The funds from the federal and state governments are available for the Magna plan, not for a competitor that endangers the future of Opel,” Thuringia’s premier, Dieter Althaus, told the Bild am Sonntag newspaper. His comments were confirmed by spokesman Fried Dahmen Saturday.

Germany, which agreed to back Opel’s sale with 1.5 billion euros (US$2.1 billion) in short-term loans, picked Magna as its preferred bidder in May to protect jobs amid the worst recession since World War II. GM has continued to hold talks with RHJ, whose automotive assets include some former holdings of Ripplewood Holdings LLC.

As GM prepares to discuss the bids this week, Chancellor Angela Merkel may place pressure on US officials to stick with Magna. Althaus said Merkel “will exercise her influence on President Barack Obama for the good of Opel workers.”

Public funds

Merkel is on vacation, government spokesman Ruediger Petz said, declining to say whether she had plans to speak with Obama.

“The German government is in continuous contact with our US partners,” Petz said Saturday by phone.

Hesse state premier Roland Koch, in an interview with WirtschaftsWoche magazine, said German officials had made clear to the Americans that public funds won’t flow to RHJ.

“Now the German position has been understood there,” Koch told the magazine. “Perhaps we didn’t make it clear enough at the beginning how serious we are about this.” A call to Koch’s office seeking confirmation of his comments went unanswered.

A spokesman for GM, Chris Preuss, declined to comment.

Magna’s bid is preferred by labor unions, German state governments and Merkel’s Social Democratic rivals, who face September 27 elections. Of GM Europe’s 55,000 jobs, 25,000 are in Germany.

Source: Bloomberg

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