Tuesday May 26, 09:08 PM
Fiat makes last bid to clinch Opel takeover
By Simon Sturdee
BERLIN (AFP) - Italian car giant Fiat (Milan: F.MI - news) made a last-ditch plea to Germany on Tuesday to accept its bid for General Motors (NYSE: GM - news) ' Opel unit over a rival Russian-backed offer, part of moves reshaping the global auto industry.
Amid signs that Canadian auto parts maker Magna is leading the race to snap up GM's struggling European operations, Fiat's boss Sergio Marchionne held hour-long talks with German Chancellor Angela Merkel and Economy Minister Karl-Theodor zu Guttenberg.
It was the latest in an intense flurry of meetings as the German government prepares to choose its preferred bidder on Wednesday, "well before" a possible bankruptcy filing by GM, Merkel's spokesman said on Monday.
John Elkann, the representative of the Agnelli family, Fiat's founders and controlling shareholders, was also in town, meeting zu Guttenberg separately.
Premiers of states where Opel has its main factories have come out clearly in favour of Magna, as have unions, while centre-left members of the governing coalition are also thought to favour the Canadian auto parts giant.
GM itself is also thought to prefer Magna, press reports have said, partly because of bad memories of previous cooperation with Fiat.
But zu Guttenberg insisted after Tuesday's talks that there was no frontrunner and that all three -- the third being Brussels-based auto parts holding company RHJ, backed by US private equity firm Ripplewood -- knew they had to improve their offers.
Marchionne said after the talks that he had dispelled a lot of misapprehensions about his bid, reiterating that a merger between the two European automakers would create benefits for both firms.
The final decision on which bid will triumph lies with GM and the US government.
But Germany, where GM has most of its European factories and employees, has a key role to play by offering billions of euros (dollars) in loan guarantees to stop 25,000 employees there losing their jobs four months before elections.
Marchionne said that Fiat had lowered its demand for German state loan guarantees to six billion euros (nine billion dollars) from seven billion euros previously.
GM, which also owns Vauxhall in Britain and Saab (Stockholm: SAABB.ST - news) in Sweden, is working against a June 1 deadline to come up with restructuring measures to convince the US Treasury to keep it afloat with billions of dollars in taxpayers' money.
If it cannot, the Detroit (DETROIT.SN - news) giant will follow Chrysler (Xetra: 710000 - news) into bankruptcy.
Zu Guttenberg over the weekend raised the possibility of letting Opel also file for insolvency but the government has stressed this is a last resort and that it would prefer to find an investor.
Merkel will hold a crunch final meeting on Wednesday, running late into the night if necessary, that will include representatives from GM and the three bidders, sources told AFP.
Marchionne wants to combine GM's European and Latin American operations with Chrysler, in which he has secured a 20-percent stake, to create the world's second largest automaker after Toyota of Japan.
He has said Fiat would cut 10,000 jobs if his bid is successful, including just 2,000 in Germany and no plant closures. Opel's senior union official Klaus Franz said that both Magna and RHJ also wanted to lay off 10,000 workers.
Magna has teamed up with Russia's top bank, state-controlled Sberbank, for a bid that would see precious metals tycoon Oleg Deripaska's truck company GAZ making Opel vehicles in Russia.
To finance its bid, Magna has arranged for a possible four-billion-euro (5.6-billion-dollar) loan from German lender Commerzbank (Xetra: 803200 - news) , sources told Dow Jones Newswires.
Italy's number two bank, Intesa Sanpaolo (Milan: ISP.MI - news) , said Tuesday it was ready to back Fiat.
German daily Die Welt said in its Wednesday edition that a Chinese company, Beijing Automotive Industry Holding, had also made a bid for Opel and had pledged not to cut any jobs for two years.
Zu Guttenberg said the report was "not entirely false."
--- Dow Jones Newswires contributed to this story ---
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