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Vauxhall/Opel to stay in GM's hands

General Motors has withdrawn its offer to sell Vauxhall/Opel, saying business is picking up so it will hold onto the company.

GM said in a statement its board made the decision because of "an improving business environment for GM over the past few months, and the importance of Opel/Vauxhall to GM's global strategy."

It said the GM board "has decided to retain Opel and will initiate a restructuring of its European operations in earnest."

It had previously given preliminary approval to sell a 55% stake on GM Europe - Vauxhall/Opel - to Canadian component maker Magna and its Russian banking partner Sberbank.

It turned into a wrangle between the UK and Germany, the European Commission and the US government over which parts of GME would see cuts and what types of financial aid would be offered.

Magna's plans included cutting around a fifth of GME's 50,000 strong workforce.

Yesterday Fritz Henderson, GM chief executive, said keeping Opel and restructuring the European division itself would be the most cost-effective solution.

"GM will soon present its restructuring plan to Germany and other governments and hopes for its favorable consideration," said Henderson.

"We understand the complexity and length of this issue has been draining for all involved. However, from the outset, our goal has been to secure the best long term solution for our customers, employees, suppliers and dealers, which is reflected in the decision reached today.

"This was deemed to be the most stable and least costly approach for securing Opel/Vauxhall's long-term future."

Henderson said the restructuring costs have been estimated at three billion euros (4.4 billion euros), "significantly lower than all bids submitted as part of the investor solicitation."

"GM will work with all European labor unions to develop a plan for meaningful contributions to Opel's restructuring," he added.

European Union regulators last month had cast doubt on the deal, saying there were "significant indications" that German aid of 4.5 billion euros (6.6 billion dollars) for the deal had been proffered only if Magna and Sberbank won the bid, which had been bitterly contested.

 

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