Volvo instead of Opel

Ford will invite the loser in the fight for the German automaker to sit at the negotiating table

The American automaker, closely following the progress of the struggle for Opel, an asset of its competitor General Motors, decided to wait for the culmination and invite the loser in this battle to sit down at the negotiating table to discuss options for a deal to buy the Swedish division of Volvo passenger cars. The Wall Street Journal reported this yesterday. According to some reports, Ford has even stopped all negotiations with potential bidders for Volvo in the hope of getting a higher price for its Swedish asset. The contenders for Opel are still a consortium of the Canadian-Austrian Magna and the Russian Sberbank, as well as the Belgian company RHJ International. It is difficult to say which of them is in the best position today. The Magna-Sberbank consortium is supported by representatives of the German government, including Chancellor Angela Merkel, as well as state governments and the German trade union Opel, who consider Magna's bid more promising and safer in terms of preserving jobs than RHJ's proposal. Meanwhile, according to some reports, GM representatives are on the side of the Belgian competitor Magna.

On Wednesday, GM's chief negotiator John Smith actually confirmed this in a blog post on the company's website, saying that the Russian-Canadian consortium's latest proposal includes controversial issues that would be difficult for GM's board of directors to agree to. "Magna's proposal includes elements related to intellectual property and Russian operations that simply cannot be implemented," Mr. Smith wrote. “GM has partners in other parts of the world with whom we own these assets. We simply cannot carry out the transaction as proposed,” the top manager concluded. The deal with RHJ "has a much simpler structure and is more easily implemented." The proposal "would cost less money to the government and would keep our global alliances strong, while still creating an independent Opel/Vauxhall entity in Germany," Mr Smith concluded. However, he noted that negotiations with Magna are ongoing with the intention of resolving these issues.

However, yesterday John Smith hastened to report that the information that GM prefers to accept the offer of the RHJI investment group due to the fact that the agreement with the Belgian company may allow Opel to be bought back in the future is not reliable. "I've seen several media reports that continue to misinterpret GM's position," The Wall Street Journal quoted Mr. Smith as saying. “GM does not intend to repurchase a majority stake in Opel from a candidate investor.” However, two weeks ago GM CFO Ray Young made the opposite statement. In an interview with the Financial Times, he then said that GM does not rule out plans to increase its stake in Opel in the future, “if the situation in the German company improves.”

A meeting of the GM board of directors to discuss the fate of Opel is scheduled for next week. According to observers, it may again end inconclusively. Ford has made it clear that it will wait until the end. It is important for the concern to intensify competition. Moreover, there are already contenders for Volvo. One of them is the Chinese automaker Geely Automobile Holdings, which, as Chinese media wrote, has already reached a preliminary agreement on a deal with Ford. It was reported that the Chinese company intends to build a line for the production of Volvo XC90 in the southern Chinese province of Guangdong. It was not reported how much it was willing to pay for the Swedish manufacturer, but experts estimate that the deal could exceed $3 billion.

Irina TSYRULEVA