General Motors has stepped up negotiations with rival suitors to offload a stake in Vauxhall/Opel, its European carmaking businesses, and could sign at least one memorandum of understanding this week as talks with preferred bidder Magna International have hit obstacles.

According to the Financial Times; RHJ International, the Belgium-based industrial holding company, has improved its earlier bid and GM is reported to be taking it ‘very seriously’.

China’s Beijing Automotive Industry Corporation is also expected to present an improved offer. But it entered the sales process later and has not progressed as far as RHJ and Magna. Italy Fiat has also expressed an interest but has offered no cash.

While Magna remains in pole position, negotiations are said to have hit an obstacle over access to GM’s global technology, which the Canadian company wants to secure.

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Business secretary Lord Mandelson has held “substantial telephone conversations” with GM amid final negotiations with bidders for its European arm.

The Government has explicitly linked any financial support for the spin-off of General Motors‘ European operations to the future of its two UK car plants in Luton and Ellesmere Port.

Britain is lobbying to prevent the German government from bowing to election-year pressure with a pledge to protect domestic jobs at the expense of Vauxhall‘s UK plants.

The three main bidders for GM‘s European arm are Fiat, Canadian car parts maker Magna and financial investor RHJ. There are claims that whichever bidder wins, up to 10,000 jobs could be cut at Vauxhall/Opel.

Beijing Automotive Industry Corp has emerged as a fourth contender for the business and insiders claim it will try to avoid job cuts in Germany for two years.

As the winning bid is being decided, General Motors has acknowledged that it has failed to secure agreement from holders of $27bn in bonds for a contentious debt-for-equity offer, and said that its directors will meet “to discuss GM‘s next steps”.

The setback, which was widely expected, clears the way for the carmaker to seek bankruptcy protection on or before June 1, the deadline set by the US government for GM to meet conditions for future financial aid, including the debt-exchange.

A General Motors bankruptcy would be the largest ever in US industrial history.


> Earlier News
General Motors may receive a fourth offer for its Opel and Vauxhall European operations after a Chinese carmaker, Beijing Automotive Industry Corp (BAIC) submitted an 'expression of interest'.

BAIC is one of China‘s leading commercial vehicle manufacturers, and manufactures Hyundai passenger cars in a joint venture with the Korean carmaker. It sold 250,000 vehicles in the first quarter of this year, making it the fifth largest Chinese carmaker.

GM is selling its European operations while preparing for a probable June 1 bankruptcy. The unit has attracted bids from Fiat, Canadian auto supplier Magna International and RHJ International, a buyout firm that has automotive assets, including some former holdings of private-equity firm Ripplewood Holdings LLC.

In related news, Fiat has said it plans to axe around 10,000 jobs if its bid to buy Opel and Vauxhall from General Motors is successful. Opel’s European operations employ around 50,000 people.

Fiat is still considered to be the most likely to buy the brands and if it does, it will become the world’s 2nd largest car manufacturer.



> Previous News

A group of US car dealers and a private equity firm have entered talks with General Motors to buy the beleaguered carmaker’s Saturn brand and turn it into an independent vehicle retailer.
The group, including Black Oak Partners of Oklahoma City, said that it would initially source vehicles from GM but would later diversify into small, fuel-efficient vehicles built by other manufacturers. It will not have any assembly plants of its own.

> Previous news

General Motors Europe, which owns Vauxhall, Opel and European Chevrolet, has had up to seven serious enquiries into buying its sticken operation, according to a Financial Times report.

The seven may include several sovereign wealth funds and at least one Asian private equity company. GM's commercial bank, Commerzbank is preparing to send offer documents shortly.

According to the report "Talks are still at a very early stage but GM wants to secure a third party investor in its European arm within the 60-day deadline - imposed last week by the US Government - to cut costs and streamline its operations, or face bankruptcy".