Opel-Vauxhall takeover deal 'is close'

Vauxhall and Opel are to be taken over by Canadian car parts company Magna, industry sources said tonight.

Parent company General Motors, the German government and Magna have agreed on the framework of a deal and are close to making an official announcement on the future of GM Europe which includes both companies, the sources said.

It includes Magna providing short-term financing to become the preferred negotiating partner for.

The German government would put up a $2.1bn bridging loan that would be repaid when the deal is closed.

Earlier German economy minister Karl-Theodor zu Guttenberg said that GM and Magna were negotiating on “new ideas” from the bidder, which also were being examined by the German government.

The German government was to hold a second round of top-level negotiations on the future of GM Europe after talks failed yesterday over new short-term funding needed to move the group into an independent legal structure. The other suitor, Fiat, stayed away from the talks, saying that it faced “unreasonable” funding demands – but CEO Sergio Marchionne stressed that Fiat was not withdrawing its bid.

Germany is looking for an agreement that will shield Opel – which employs 25,000 people in Germany, nearly half GM Europe’s work force – from a looming GM bankruptcy court filing in the US and extensive restructuring.

The government wants to make it legally independent under a trustee so that any taxpayer assistance does not go to the US, then would provide bridge financing while Opel looks for a new, permanent owner.

“I expect there to be a result today,” said Juergen Ruettgers, the governor of North Rhine-Westphalia state – one of four in Germany that has Opel plants.

Fiat is on the verge of taking control of a 20% stake in Chrysler, pending the completion of restructuring in bankruptcy court in New York.

Separate to the Berlin talks, the European Commission was hosting talks among ministers to co-ordinate government efforts to save GM’s European operations.

Opel and Vauxhall also have operations in Belgium, Spain and Poland among other countries.