Vauxhall's future hangs in the balance

GM board meets to choose buyer, but decision still needs sign-off from Opel Trust

Vauxhall's future was hanging in the balance yesterday as the board of its embattled US parent company, GM, met to choose between the two competing buyers for its European operations.

The choice – between Magna International, the Canadian car parts manufacturer, and RHJ International, a holding company of the US private equity group Ripplewood – has attracted growing controversy as Britain and Germany fight to save jobs at their countries' respective Vauxhall and Opel marques.

A decision from the GM board still has to be signed off by the Opel Trust – the five-strong group to whose ownership GM Europe (GME) was transferred when GM went into Chapter 11 bankruptcy protection at the beginning of June. Sources at GM yesterday said a formal announcement will be made next week at the earliest.

The sale has major political implications. Both the UK and German governments will be providing slugs of money to lubricate the deal, and job cuts are a certainty as the new owner scales back the group's excess capacity.

In the latest scuffle, Lord Mandelson, the Business Secretary, accused the German Chancellor, Angela Merkel, of trying to distort the outcome for political reasons. Berlin is an outspoken supporter of the Magna bid, thanks to guarantees from the Canadian company that it will not shut down any of Opel's German plants, which employ 25,000 people. Although GM originally favoured Magna, it cooled on the deal, spooked by the links with Russia's state-owned Sberbank and van maker Gaz. The US group is concerned about intellectual property issues and competition with its own Chevrolet marque in the growing Russian market.

The British also err towards RHJ. The private equity group has promised to save Vauxhall's two UK factories, in Luton and Ellesmere Port, which employ around 5,000 people. But the strongest statement from Magna has been that "no immediate plant closures are contemplated".

But the Germans are piling on the pressure. The Berlin government this week pledged €4.5bn (£3.9bn) to GME if the parent company selects Magna, prompting outrage from Lord Mandelson. "This decision, above all, needs to secure the long-term viability of both Opel and Vauxhall in the UK and should not be distorted by political considerations in any one country," he said.

Berlin is so keen it has said it will put up the money before other governments fix their stakes. And there have also been hints that the same money will not be available to RHJ.

Magna has rejigged its plans to accommodate GM's concerns. Under the original scheme, Magna was to hold 20 per cent of GME, Sberbank 35 per cent, GM 35 per cent and Opel staff 10 per cent. But the revised version splits the Magna/Sberbank holding, leaving each with 27.5 per cent. The competing deal sees RHJ take 50.1 per cent of GME, while the rest remains with GM.

Start your day with The Independent, sign up for daily news emails
Sport
Seth Rollins cashes in his Money in the Bank contract to win the WWE World Heavyweight Championship
WWERollins win the WWE World Heavyweight title in one of the greatest WrestleMania's ever seen
Arts and Entertainment
Louis Theroux: By Reason of Insanity takes him behind the bars again
tvBy Reason of Insanity, TV review
Arts and Entertainment
Cassetteboy's latest video is called Emperor's New Clothes rap
videoThe political parody genius duo strike again with new video
Arts and Entertainment
tvPoldark, TV review
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor