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BERLIN — General Motors Co. will sell European unit Opel to Canadian auto parts maker Magna International and Russia's Sberbank in a deal that preserves GM's ability to develop new cars with its longtime subsidiary.
The announcement Thursday was a politically charged win for German Chancellor Angela Merkel, who saw the deal as the best change to save jobs at a major employer less than three weeks before national elections on Sept. 27.
GM will see a 55-percent stake in Adam Opel GmbH transferred to the Canadian-Russian team but will keep 35 percent for itself, with 10 percent held by the workers. Opel had been placed in a trust with Germany holding 65 percent and GM 35 percent to keep it from being drawn into GM's restructuring under bankruptcy protection in the U.S.
The deal still depends on conditions that could take weeks or months to work out, such as final agreement for government financing and union support for what could be painful cuts, with chief GM negotiator John Smith indicating Opel plant in Antwerp, Belgium, could be wound down.
The announcement offers some clarity to workers fearful about their jobs as the talks dragged out for months.
"My son has been asking me every day for the last nine months for how much longer I will still have a job," said Werner Karnitz, 52, a worker at the Opel plant in Bochum, Germany.
GM once favored a rival bid by investment firm RHJ International, in part for fear that Magna and Sberbank could create competition for Chevrolet in Russia, a key market. More recently, GMs new, post-bankruptcy board had ordered management to consider more options, including keeping Opel, in part over worries that the company could lose control of shared GM-Opel technology and patents to competitors.
But German government support appeared decisive in the end. Merkel and the German government backed the bid by Magna and the Russian state-backed lender, giving euro1.5 billion ($2.2 billion) in bridge financing to keep Opel afloat and offering euro4.5 billion more in credit to complete the deal.
With the German government rejecting the RHJ bid and money scarce to keep Opel going, GM had little choice, said Tim Urquhart, an analyst at IHS Global Insight in London.
"I think basically their hands were forced," he said. "In the final analysis, the only other option was to shut the thing down."
"We see in the Magna and Sberbank proposal a couple of additional levers that we don't think we ourselves can bring to the party," said GM's Smith. "I think the board conceded that new Opel, as it seeks to restructure, could very well use a different management style.
Magna Chairman Frank Stronach said the company would put up "appropriate firewalls" to ensure its auto parts business and Opel would remain segregated "so that the confidential and proprietary information of its customers is fully protected."
Smith said Magna and Sberbank are investing euro500 million for the stake — euro450 million in equity and a euro50 million convertible loan.
Merkel said talks would be held with other countries where Opel has locations — Britain, Poland, Spain, Belgium and Portugal — in the coming weeks to ensure the burdens of restructuring could be shared fairly.
"This is what the government wished," Merkel said. "Opel still has a difficult way ahead of it, but I trust the workers will take on the task."
Smith warned that while the Opel plants in Germany were safe, there would be changes elsewhere.
In Magna's proposal, work at a facility in Antwerp, Belgium that employs, 2,231 workers and builds Corsa "winds down," Smith said. He added that some of production in Zaragosa, Spain would shift to Eisenach in east Germany.
"In all plans, Antwerp is the plant that is idle," he said.
Smith said both plants in Britain, Ellesmere Port and Luton, were viable.
Labor, though, was poised to help, a sign that Magna's promise to keep four Opel plants with 25,000 workers open in Germany was well received.
Klaus Franz, the chairman of the European Employee Forum of General Motors said GM's decision was embraced by workers and they were willing to contribute to restructuring while seeking to avoid layoffs. "Alternatives are at hand. We have developed viable alternatives and we will put them on the negotiation table," Franz said.
Although it's unlikely in the short term for political reasons, Opel's new owners will eventually have to shut factories and cut employees in Europe in order to make the Opel-Vauxhall operation financially viable, said auto analyst Urquhart.
"No matter who would have been in control — GM, RHJ or Magna — I think many of the same things would have been done. Obviously they have too much capacity and things will have to be cut," he said.
Opel has been losing money f0or years. Its European operations, which include Opel, Vauxhall and Saab, posted an operating loss of about $2 billion in the first quarter of 2009 and a total of nearly $3.7 billion for the years 2006-2008. Analysts say most of the losses can be attributed to Opel and Vauxhall.
GM had sought to unload Opel since it ran into severe financial trouble late last year, seeking state help in November 2008. Industry analysts say the unit has too many employees and too much factory capacity for its sales level and its costs are too high.
But Opel and its engineers are also highly integrated into GM's global product development system, designing the underpinnings for its next generation of small and midsize cars. The new Buick LaCrosse is built on an Opel Insignia platform, and GM's new global small cars are based on the Opel Astra.
Urquhart said that GM must have worked out a deal to stop the Opel technology from falling into the hands of Russian automaker GAZ, which has ties to the state-owned Sberbank.
All Smith would say was, "We have a very good agreement providing new Opel and GAZ, the Russian branch which is part of new Opel," with some access to GM-Opel technology. He did not elaborate.
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Krisher reported from Detroit. Associated Press Writers Melissa Eddy, Kirsten Grieshaber and Thomas Rietig in Berlin contributed to this report.
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