GM Concerned Over Magna's Bid For Opel

BERLIN (AP) -- General Motors Co.'s chief negotiator on Thursday downplayed prospects of a quick deal on the future of the European Opel unit and highlighted potential problems with a bid from Canadian car parts maker Magna that is favored by the German government.

John Smith was in Berlin this week for talks with the two bidders and the German government, which is offering financial help to make a deal possible.

Amid speculation in Germany that a decision could be imminent, Smith wrote that reports "have tended to exaggerate the state of progress."

A consortium of Magna International Inc. and Russian lender Sberbank is competing for a majority stake in Opel, with a rival bid from Brussels-based investor RHJ International SA.

Smith, writing in GM Europe's "Driving Conversations" blog Thursday, said the company had "constructive" meetings with both bidders this week but that "there were very few significant issues" with RHJI's bid "so most of our time has been spent working with the Magna/Sberbank team."

Their bid, he said, raised questions such as Opel's potential cooperation with Chevrolet in Russia and intellectual property transfer rights there that GM wants clarified.

"I can report some progress, resolving perhaps one-third of the issues during a first day of talks," Smith wrote. However, he added that "little progress was made in whittling down the outstanding issues, in part reflecting the return of some issues that we previously considered to be resolved."

He did not elaborate.

"Russia, intellectual property, product development responsibilities and various governance issues are among the unresolved issues, many of them on the table for some time now," he wrote. "There are no such issues to resolve with the RHJI proposal which, as noted previously, is both simpler and requiring less government-backed funding."

The German government has made clear that it prefers the bid from Magna and stressed that GM needs to take its views into account in deciding on a buyer.

The talks also are of interest to other European countries including Britain, where Opel sister brand Vauxhall is based; and Belgium, Spain and Poland, where Opel has operations.

Smith said there would be "more to come over the next couple of weeks."

Under a structure created earlier this year to keep Ruesselsheim, Germany-based Opel out of GM's filing for bankruptcy protection, 65 percent of Opel has been formally under the care of a trustee since the beginning of June, with GM holding the remaining 35 percent.

Smith stressed that Opel will still need a partner with experience in the industry.

"Opel needs a close connection to a high-volume, global automobile company to take full advantage of related economies of scale as it will not survive for very long on its own," he wrote.

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