Magna resolves final Opel issues with GM

By Christiaan Hetzner and Angelika Gruber

FRANKFURT (Reuters) - Magna and its Russian partner Sberbank have reached an agreement in principle with General Motors management over a contract to buy 55 percent of GM's European unit Opel, Magna's co-CEO Siegfried Wolf told Reuters on Thursday.

The boards of GM and Canadian automotive group Magna still must approve a deal before trustees who control 65 percent of Opel and its British sister brand Vauxhall could give their final consent, he said.

"At 4:30 this morning Austrian time, an agreement on all issues was reached at a management level between Magna, Sberbank and General Motors," Wolf said, adding "one change or the other" was made in its more than 600-page-long offer.

"We submitted a copy of a final contract that can be signed and implemented. I don't want to be overly optimistic -- and the contract will be certainly be examined in all its aspects -- but roughly speaking there are no unresolved issues with management any more."

The agreement does not necessarily mean that competing Opel bidder RHJ International is out of the running since the Belgian private equity firm has also reached an accord with GM's chief negotiator.

While Magna plans to expand Opel's reach to return to profitability, RHJ aims to shrink Opel. "We are still very much in the race," an RHJ spokesman said.

The German task force would decide on the bids at the weekend, but could not rule out a difference of opinion with GM, German Chancellor Angela Merkel said at a conference in Berlin. She said the German government still preferred Magna.

"We want a quick decision, and have a clear preference," Merkel said, adding that it was possible a preliminary decision could be made next week.

MAGNA BID

After weeks of hard bargaining, Wolf said his consortium was able to iron out the last details such as access to GM's technology or which markets are open to the new Opel.

"Opel would have the freedom to decide where products will be designed and engineered. It would have a say whether certain things can be developed independently without having to pay royalties, such as engines or transmissions designed for specific applications," the Magna co-CEO said.

Magna's Russian industrial partner, GAZ, would also have access to GM's intellectual property and could buy Sberbank's 27.5 percent stake in Opel.

"There is no lock-up period in which Sberbank has to hold its stake in 'NewOpel' for a minimum amount of time, but there is a very clear process that requires GM's approval if it were sold to anyone other than GAZ or Russian state bank VEB," Wolf said.

In a compromise, Magna will not take a direct financial interest in GM's Russian business.

"Although Opel and Chevrolet share the same dealers in Russia, Magna will not own any equity in the sales and distribution network, but work will be shared in areas like back office in order to make use of synergies," he said.