RHJ back in race for Opel stake

Opel and Vauxhall workers are concerned about their jobs

Belgian private equity firm RHJ International has re-emerged as a strong contender to buy a stake in carmaker Opel from General Motors.

The Brussels-based firm said it was in "advanced" negotiations with GM.

RHJ pulled out of talks in May, leaving Canadian car parts maker Magna as the front-runner to take over Opel.

But talks between GM and Magna appear to have stalled, with RHJ as well as Beijing Automotive Industries now back in the race for the German carmaker.

'Falling out'

Magna has the backing of the German government and had, until now, been seen as the most likely buyer of Opel.

However, relations between GM and Magna have soured in recent weeks, analysts say.

The Canadian firm wants control of some GM intellectual property rights, as well as distribution rights in Russia, something which the US carmaker is not willing to hand over.

A mid-July deadline imposed by Magna to finalise an initial agreement is also seen as overly ambitious, analysts say.

GM is, therefore, "trying to ensure that it has a plan B", according to Howard Wheeldon at BGC Partners.

To this end, it has been negotiating with RHJ.

"These discussions have been taking place over a number of weeks and are at an advanced stage," the Belgian firm said in a statement.

Tactical game

The discussions may also be a way of forcing Magna into a compromise, Tim Urquhart at Global Insight told the BBC.

"Getting RHJ more involved is a tactic to put more pressure on Magna. GM is pushing back, saying to Magna 'you're not the only game in town,'" he explained.

Last week, GM confirmed that it had received a bid for Opel from the Chinese firm Beijing Automotive Industries (BAIC).

GM chief executive Fritz Henderson also said that negotiations were continuing "around the clock" to conclude a deal to sell GM Europe, which includes Opel and Vauxhall.

But much work is still needed before any such deal can be reached, according to analysts, as obstacles exist to all three bids.

"Long-standing enmity in Germany to private equity firms," said Mr Urquhart, complicates the RHJ bid, while BAIC is also looking for intellectual property rights.

Job concerns

GM has just emerged from bankruptcy protection after losing billions of dollars following a massive slump in sales due to the global economic downturn.

As part of its cost-cutting measures, the carmaker is selling GM Europe, which employs a total of 54,500 workers across Europe, with 25,000 based in Germany.

Under the Vauxhall brand, the firm employs 5,500 UK workers and has plants in Luton and Ellesmere Port.

There have been worries that UK workers will suffer sharp job losses as financial support for Opel from the German government safeguards German jobs.