* German govt and states still prefer Magna's bid over RHJ
* GM response "guarded" after frank talks, more talks needed
* BAIC lagging in the race
(Recasts after end of meeting)
By Gernot Heller
BERLIN, July 22 Canada's Magna MGa.TO is still
Germany's preferred partner for carmaker Opel, Chancellor Angela
Merkel said on Wednesday, setting the stage for a showdown with
General Motors over the takeover bids.
Officials from the German government and GM discussed the
three offers for Opel, which had been submitted on Monday, but
failed to agree on which they liked best.
GM has received offers from a consortium of Canadian
supplier Magna and Russia's Sberbank (SBER.RTS), from private
equity firm RHJ International RHJI.BR, and a third from
China's Beijing Automotive (BAIC).
GM has to agree a choice with Germany, which is providing
loan guarantees to the buyer and the subject is likely to be an
issue in the campaign for Germany's election on Sept. 27.
"We have made clear that we view the Magna plan as
sustainable in all respects," Merkel said at a company visit in
nothern Germany, adding the talks between GM and German
officials would need longer.
German officials informed GM representatives of their
preference for Magna, said Jochen Homann, head of the German
government's Opel Taskforce after the four-hour Berlin meeting.
"GM was very guarded about this," he said, adding all the
bids had several questions to be cleared up. Sources close to
the talks said the officials had had a frank exchange of views.
GM likes the offer from RHJ, a Belgium-based financial
investor that aims to shrink production to return Opel to profit
and may be open to selling it back to GM at a later date.
Hohmann said further talks would take place once issues had
been cleared up. He said all potential investors were offering a
modest sum in terms of their own capital and that GM had to give
way on some issues, such as on licence fees.
"We are pushing to get answers to the outstanding questions
very quickly," he said.
Eventually, the two sides -- along with other European
governments with Opel plants -- have to agree on a partner.
Both are represented on the Opel Trust, which has been
responsible for Opel since GM entered bankruptcy in June.
The trust holds 65 percent of Opel shares and must approve
the investor. GM holds 35 percent of Opel shares, while the
German government is being asked to provide loan guarantees
worth up to 4.5 billion euros ($6.4 billion).
Magna wants to expand Opel's full-scale car assembly
business and forecasts high growth rates, particularly in
Russia, home of consortium partner Sberbank SBER03.MM.
Several people familiar with the matter said the states that
are home to Opel factories also still prefer Magna's offer. The
states of Rhineland-Palatinate, Hesse, North Rhine-Westphalia
and Thuringia discussed the matter on Wednesday.
The state premiers, like Merkel are fearful of the prospect
of mass layoffs among Opel's roughly 25,000 workers in Germany
before September's election.
RHJ envisages shrinking Opel's production footprint and
returning the company to profitability. RHJ announced earlier
creditors gave the final green light to a debt-for-equity swap
agreed by a majority of lenders late in May for its casted metal
component maker Honsel, RHJ's only European automotive holding.
Homann said the Chinese carmaker was still in the race for
Opel but lagging behind.
Magna representatives met the heads of the European Opel
dealers' association to discuss their involvement in the sales
and distribution structure.
"We were very impressed; Magna explained their idea to us
openly and honestly. They managed to win us over as ambassadors
for Magna," said Albert Still, Vice Chairman of the Euroda
In Britain, Business Secretary Peter Mandelson met Vauxhall
management and unions. British authorities want to protect UK
production and its 5,500 strong workforce. GM Europe is to hold
talks with the UK later this week
(For a Factbox on what Opel's suitors have in mind, click on
(For questions and answers on the process for deciding
Opel's fate, click on [ID:nLK182394])
(Additional reporting by Christiaan Hetzner, Jan Schwartz)
(Writing by Paul Carrel and Madeline Chambers, Editing by Will
Waterman and Elaine Hardcastle)