German Economy Minister Karl-Theodor zu Guttenberg said he remained unpersuaded by any of the three bids for General Motors Corp’s (GM) Opel unit even after Fiat SpA sweetened its offer aimed at winning state aid.
Guttenberg, who is leading efforts to find a “viable” bid for GM’s European operations, said on Saturday that Fiat’s new offer was being reviewed to see “if they can stand up everything they say.”
Questions also remain over bids by Canadian car-parts maker Magna International Inc and RHJ International SA, a fund that has some former holdings of private-equity firm Ripplewood Holdings LLC, he said in an interview in Berlin.
“We still cannot be sure whether Magna, or Fiat, or Ripplewood will ensure that bridge loans won’t disappear into a black hole; that any further guarantees will be effective; and that they’re really offering something more than high-minded romantic ideas,” Guttenberg said.
Fiat, which is in talks to form an alliance with Chrysler LLC in North America, raised its offer for Opel after Magna emerged on Friday as the leading bidder, state leaders including Roland Koch said. Russelsheim-based Opel has said it needs 3.3 billion euros (US$4.6 billion) in state aid to survive as GM struggles to avoid a June 1 bankruptcy.
A meeting hosted by German Chancellor Angela Merkel on Friday agreed to focus on Aurora, Ontario-based Magna, Canada’s largest car-parts maker, for “concrete talks” because it offers the prospect of developing new markets and avoiding “dependence on Fiat-Chrysler technology,” Koch, the prime minister of Hesse state, where Opel is based, said in an interview on Saturday.
He didn’t specify how Fiat’s new bid changed.
“At the same time, we’re still reading our incoming mail,” Koch said.
All bidders, including Magna, must make it clear how much they’re prepared to invest in Opel.
“If an investor believes in his investment, they also have to put something on the table” and not just collect state loan guarantees, Koch said.
While German lawmakers from both main parties in Merkel’s coalition want to save Opel jobs before elections on Sept. 27, bidders must secure the backing of Europe’s biggest economy for their plans for Opel and the UK-based Vauxhall brand. Magna is also preparing to improve its offer, Welt am Sonntag newspaper reported in an advance copy of an article in yesterday’s edition.
“Fiat has improved its offer because it needs Opel’s technology,” Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen, said in an interview.
At the same time, new offers “will unfortunately delay the process to find a solution for Opel when time is getting short because GM’s insolvency is looming on the horizon,” he said.
The bids from Magna and Ripplewood include cash, while Fiat’s offer requires 7 billion euros of financing to reorganize Opel, according to familiar with the matter said. Fiat’s bid has two parts: an offer for the Opel and UK-based Vauxhall units, and an alternative plan to also buy GM’s operations in Brazil and Argentina, one of the people said.
Magna, which aims to join Russian partner OAO Sberbank in investing as much as 700 million euros in the deal, would be able to boost Opel’s presence in Russia, a market that is expected to grow to 5 million cars in 2015, Dudenhoeffer said.
“Magna would also be able to preserve more jobs at Opel than Fiat, which already has overcapacity problems itself,” he said.
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