GM says China's BAIC out of Opel race

BERLIN: General Motors Europe said on Thursday it was no longer talking to China's Beijing Automotive Industry Holding (BAIC) about its bid to acquire Opel, leaving just two bidders: Magna and RHJ International.

"We had a good and thoughtful discussion around the key operating metrics and key issues associated with the three final offers we received on Monday evening," said John Smith, GM's chief negotiator for the sale of Opel, the European branch of the US car maker.

"We have agreed to continue detailed talks with both Magna and RHJI to secure Opel's future."

The bid of Canadian auto parts maker Magna, which has teamed up with Kremlin-controlled Russian bank Sberbank and automaker GAZ, won German government backing in May and it remains Berlin's favourite.

Authorities in Berlin hope to come to an agreement with GM in the next few weeks, a government spokesman said Wednesday, although the final decision on who will finally take over Opel will probably not occur for several months yet.

While the final decision lies with GM, the German government is involved as it is set to stump up billions of euros (dollars) in loan guarantees to sweeten any takeover deal in a bid to save tens of thousands of jobs.

The regional governments involved in the talks are also backing the Magna bid, with the state premier of Thuringia saying that all four states where Opel has factories were backing the Canadian proposal.

In an interview with the local Thueringer Allgemeine Zeitung on Thursday, Dieter Althaus said: "The Opel states are united."

Magna is the only potential investor likely to provide a sustainable future for the company and maintain the plants in the state, Althaus said.

In late May, the German government agreed to support with cheap loans and loan guarantees a bid for a majority stake in Opel by Magna, which besides Russian bank Sberbank has also teamed up with Russian automaker GAZ.

Magna and Sberbank will each purchase a stake of 27.5 percent and seek 4.5 billion euros (6.4 billion dollars) in state guarantees.

Russian business daily Kommersant has reported that Magna would also demand that GM include intellectual property rights as part of any Opel deal.

Under the Magna plan, GM would retain 35 percent of the business and 10 percent would stay in the hands of the 25,000 Opel employees.

RHJ International is seeking 700 million euros less in state guarantees than Magna and would buy a 50.1 percent stake for 275 million euros.

RHJ International is thought to be planning around 8,100 job losses Europe-wide in the Opel business.

The German government said in May that Magna's plan would entail the loss of around 2,600 jobs in Germany, with a further 8,500 elsewhere in Europe.