* GM board opts to keep Opel European operations
* Decision marks sharp reversal from plan to sell to Magna
* GM says restructuring Opel to cost about 3 bln euros
(Adds confirmation, comment by GM CEO, ramifications of
decision, analyst comment, other details)
By Kevin Krolicki and Philipp Halstrick
DETROIT/FRANKFURT, Nov 3 (Reuters) - The board of General
Motors Co [GM.UL] has opted to keep Opel, undoing months of
painstaking negotiations to sell the European unit to a
Russian-backed group led by Canada's Magna (MGa.TO).
GM confirmed the decision made by its 13-member board after
a meeting of directors on Tuesday in Detroit, saying that
improving business conditions and the strategic importance of
Opel to its operations had prompted the move.
The decision represented a setback for Magna, raised the
risk of conflict with Opel's European unions and left open the
question of how GM would finance a plan to go it alone on Opel
four months after the U.S. automaker emerged from a bankruptcy
financed by the Obama administration.
The decision by the GM board also marked a sharp break in
direction from the course for Opel endorsed by GM Chief
Executive Fritz Henderson who had said a sale of the European
unit was the most likely outcome two weeks ago.
GM said it expected that restructuring Opel on its own
would cost about 3 billion euros ($4.41 billion).
"GM will soon present its restructuring plan to Germany and
other governments and hopes for its favorable consideration,"
Henderson said in a statement.
The meeting of the GM board came after European Union
officials challenged the terms of the funding Germany had
pledged to support the sale of Opel to Magna.
Germany had promised 4.5 billion euros ($6.58 billion) in
aid to help close the Magna deal, which was widely seen as the
option for Opel most likely to preserve jobs.
But EU officials said GM needed to confirm that it would
have agreed to sell Opel if Germany had made clear that the
same funding would have been available to any buyer.
GM's board had opted to sell a 55 percent stake in the
loss-making Opel unit to Canadian group Magna and its partner
Sberbank (SBER03.MM).
The Opel saga has been running for almost a year. GM first
asked Germany for loan guarantees in November 2008. The
automaker had been seeking a buyer for the unit, which includes
the Opel and Vauxhall brands, since March.
Auto analysts said keeping Opel would allow GM to maintain
control of vehicle development and share parts across a few
global platforms, much as Ford Motor Co (F.N) has done in its
turnaround.
"If they are going to be competitive on a global scale,
they really don't have much choice but to keep Opel," said
Autoconomy analyst Erich Merkle.
GM's move is a setback for Magna founder and chairman Frank
Stronach, who left his native Austria at age 21 as an
impoverished toolmaker but went on to build one of the world's
biggest car parts groups. [ID:nN10272678]
Magna had no comment on the GM decision.
The German state of Hesse's premier, Roland Koch, said he
was angered by GM's decision not to sell Opel to Magna, and
that he wanted GM to pay back its bridge loan by Nov. 30.
Opel's workforce -- which was to be cut by a fifth under
the new owners from 50,000 -- was supposed to receive a 10
percent stake in the new company in return for 265 million
euros in annual cost concessions.
GM would have kept a 35 percent stake in the unit under the
now-scrapped deal.
(1 euro=$1.47)
(Reporting by Kevin Krolicki and Philipp Halstrick, additional
reporting by Gernot Heller in Berlin; John Crawley, Jui
Chakravorty, Soyoung Kim, David Bailey in Detroit and Ben
Klayman in Chicago, editing by Matthew Lewis)
