Page last updated at 18:32 GMT, Wednesday, 22 July 2009 19:32 UK

Germany affirms Magna preference


The German government has said that after initial evaluations of the three bids for Opel, it still favours a deal with Canadian car parts maker Magna.

The government supported Magna's bid in May, but on Monday General Motors (GM)confirmed that it had received three official bids for Opel.

Belgian-based investor RHJ International and China's Beijing Automotive Industries are also bidding.

A buyer for Opel is expected to be chosen by the end of July.

A final deal could then be agreed by the end of October.

The German government's preference for the Magna bid "has been confirmed by our evaluations," said government spokesman Ulrich Wilhelm.

Chancellor Angela Merkel said: "We have indicated that we see the Magna concept as a sustainable one."

Complex talks

The ultimate decision on which company buys Opel, which includes Vauxhall in the UK, rests with GM, but the German government will have a big role to play as it has provided a 1.5bn euro ($2.13bn; £1.3bn) bridging loan to prevent the company collapsing.

Germany is also prepared to provide an additional 3bn euros of loan guarantees to the new owner.

The Magna bid, which involves the car parts maker and the Russian Sberbank, had been seen as the frontrunner in the race to buy Opel.

However, talks with GM stalled after it wanted intellectual property and distribution rights in Russia to be included in any deal.

Opel's future become even less clear-cut when RHJ, which is backed by US private equity firm Ripplewood, said last week that its negotiations with GM and Germany were "at an advanced stage".

GM was forced to put Opel up for sale as part of its massive restructuring that saw it go into Chapter 11 bankruptcy in the US - before emerging as a leaner company with less debt.

Opel has been placed under the ownership of a trustee in which both GM and the German government have a stake - making the process of deciding a buyer complex.

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