Germany to Give More Money if GM Accepts Magna

RHJ International is slowly losing ground in the race for Opel as German officials are putting pressure on GM's shoulders and ask the former bankrupt automaker to accept the offer submitted by Magna. After Angela Merkel publicly revealed her support for the Canadian - Austrian partsmaker, Germany now steps in and announced that the government is willing to provide more money in case GM agrees to hand over Opel to Magna.

Deputy Economy Minister Jochen Homann said that the money could be very fast approved because the federal government and the German states holding Opel plants will split the amount of money to be given to GM.

"We could envisage making a loan available, then later agreeing precisely how the costs are to be shared out with the other European countries," Homann was quoted as saying by Reuters.

The GM board will meet on Friday and some rumors are pointing that choosing the new Opel owner is the main topic on the agenda. "It's possible that the GM board will review both offers on Friday and will give a recommendation," Homann said. "The German government has clearly stated that it favors the Magna offer. There are no doubts from this perspective."

General Motors hasn't commented on Germany's point of view but the company two weeks ago revealed that RHJ's offer is more attractive because it involved less government funding.

"The bid from RHJI is completed and would represent a much simpler structure and would be easier to implement. It would require less monetary participation by the government and would keep our global alignments solid, while still creating an independent Opel/Vauxhall organization in Germany. This remains a reasonable and viable option to be considered as the very difficult issues around the Magna negotiations continue to be worked," John Smith, GM group vice president (and GM’s chief negotiator for the sale of Opel), said in late July.