Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

GAZ Joins Bid for GM's Opel Unit

ReutersA German working on an Opel Corsa at a plant in Eisenach on Monday. Analysts say Opel would give GAZ much-needed access to Western technologies.
Car giant GAZ is taking part in a bid for GM's European operations, the German government said Monday.

GAZ is a partner in a takeover offer from Austrian-Canadian auto parts producer Magna for ailing GM's Opel unit, Felix Probst, a spokesman for the German Economics Ministry, said by telephone from Berlin.

Probst told The Moscow Times that Magna executives put forward a "rough concept" last week that is now being examined.

The ministry later refused to confirm reports that Sberbank was also part of Magna's consortium.

GAZ spokeswoman Natalya Anisimova declined to comment Monday, as did spokespeople for Magna and GM Russia.

GAZ, part of Oleg Deripaska's troubled business empire, earlier denied any interest in Opel. Deripaska owned a 20 percent stake in Magna until October, when he ceded it to pay off debt.

"Bidding for Opel is logical for GAZ, because it's looking for a new strategy after it failed to make the Volga Cyber model popular and filed for bankruptcy protection for van maker LDV," said Mikhail Ganelin, an analyst at Troika Dialog. "GAZ has no fresh ideas and no money to develop anything new."

GAZ announced April 29 that it had filed for bankruptcy protection for its British-based van maker LDV.

Magna's bid competes with Italian carmaker Fiat, whose CEO Sergio Marchionne held talks with German Economics Minister Karl-Theodor zu Guttenberg in Berlin on Monday. Guttenberg said after the meeting that Fiat's plan was "interesting" but needed a closer look. He told reporters that the Italians, who are also tying up with bankrupt U.S. carmaker Chrysler, calculated the price tag for Opel at 5 billion euros to 7 billion euros ($6.5 billion to $9 billion), German media reported.

Magna CEO Frank Stronach said last week that his company had enough money to buy Opel. "We have about $1.5 billion in cash in the bank, so we can easily make such a deal without putting ourselves at risk," he told the Austrian daily Kleine Zeitung.

A German regional economics minister said Monday that Sberbank was supplementing the Magna bid. "The Russian market and related opportunities to enter the Indian market through Asia are of course playing a role here," Juergen Reinholz, economy minister in the state of Thuringia, told Bloomberg.

The German newspaper Rheinische Post reported April 29 that Magna and its Russian partners were working together to secure a significant holding in Opel. The paper said Magna would own 19.1 percent of Opel, while Sberbank and GAZ would hold 31 percent.

"Cooperation with GAZ is good for Opel, because it could start the production of its cars in Nizhny Novgorod and thus expand to the markets of Russia and CIS countries," said Ganelin of Troika Dialog.

Economics Ministry spokesman Probst said there were more than five bidders for Opel so far and that Fiat and Magna were the most prominent of them. "The government has not determined a favorite," he said.

He said the German government was just checking the bidders' qualification for financial assistance like state loans. The decision on who gets GM's European division will be made by GM. "The [German] government has nothing to sell," Probst said.

Workers' representatives at Opel have voiced stiff opposition to selling the company to Fiat, arguing that the Italian group is more of a competitor than a savior and that it would be a Fiat rescue at Opel's expense.

The car workers' unions have a say in the process because GM's rescue plan for the European unit calls for workers to make $1.2 billion in concessions.

German analysts have echoed the unions' doubts and praised a deal with Magna and GAZ as a win-win situation, arguing that Magna would receive a big buyer for its components, while GAZ could get much-needed access to modern Western technologies.

Opel and GAZ do actually have a link -- a very ancient one in terms of carmaking. The legendary Pobeda ("Victory") sedan produced by GAZ after World War II was originally engineered on the basis of the Opel KapitКn, launched in 1939 and considered to be among the world's most modern cars at the outbreak of war.