GM to sell majority Opel stake to Magna

General Motors has decided to sell Opel to a group led by Canadian car parts maker Magna, signalling an end to months of uncertainty for the European unit and its 50,000 workers.

The decision, announced after a two-day meeting by the GM board, was welcomed by German Chancellor Angela Merkel who had lobbied for the Russian-backed Magna bid and could profit from GM's choice in an election on September 27.

Talks on Opel, control of which GM is selling as part of a US government-orchestrated restructuring, have lasted months, fuelling anger among staff, half of whom are in Germany.

Detroit-based GM will keep a 35% stake in Opel.

GM opted for Magna and its Russian partners, state-owned Sberbank and GAZ, over a rival offer from Belgium-listed investor RHJ International.

The decision was approved by a trust set up in May to keep Opel from being swept into GM's bankruptcy proceedings. Approval by the trust, which holds 65% of Opel, was necessary for the GM decision to go through.

GM said a definitive agreement should be ready to sign in a few weeks and predicted the deal could close in a few months.

Merkel said the deal offered Opel a 'new beginning' and played down conditions attached to the sale, calling them 'manageable and negotiable'.

But analysts were more sceptical, describing the decision to sell to Magna as political.

Germany had promised €4.5 billion in government guarantees if GM opted for Magna and its Russian backers, while refusing to support the rival bid from RHJ.

GM has controlled Opel, which traces its roots in Germany back to the 19th century, for the past 80 years.

It is based in the western city of Russelsheim and has four plants in Germany where it makes everything from three-door Corsa sub-compacts to Zafira vans.

Opel has two factories producing automobiles under the Vauxhall badge in Britain as well as major sites in Belgium, Poland and Spain.

Magna and Sberbank are contemplating winding down Opel's plant in Antwerp, Belgium and shifting production from Zaragoza in Spain to Eisenach, Germany, GM vice-president John Smith said after the deal was announced.