Talks between the German government and Vauxhall’s ultimate parent, floundering American giant GM, were supposed to conclude last night with the announcement of a preferred bidder for GM’s European arm – Opel in Germany and Vauxhall here in Blighty.
But the negotiations descended rapidly into acrimony when GM tried to pull a fast one, demanding additional last-minute financing to the tune of €300m. This really got up the nose of German Finance Minster Peter Steinbruck, who described the request as ‘scandalous’ and a ‘nasty surprise.’
Strong stuff from the sober-suited Teuton, but hardly surprising in the circumstances. Germany has already poured billions of Euros into safeguarding the 25,000 Opel jobs in the country, so asking it for even more cash at the eleventh hour was always a high-risk option.
But then, GM doesn’t have much to lose. Since bondholders refused to exchange its corporate debts for equity stakes in the firm earlier this week, the US carmaker has been speeding straight for the brick wall of bankruptcy protection, with no brakes and the steering wheel locked in the straight-ahead position. The firm is now widely expected to enter Chapter 11 status this weekend, so there is a kind of logic to trying to get a bit more juice out of what will probably be the last negotiations it conducts as an independent entity.
As for the fate of those Vauxhall employees at the factories in Luton and Ellesmere Port, Business Secretary and well-known supporter of the car industry (ahem) Peter Mandelson says there’s no need to worry. Both of the remaining bidders for GM Europe – Italy’s Fiat and Canada’s Magna – have assured him that the carmaker’s future in Britain is secure and will continue ‘indefinitely’. So that’s alright then.
German negotiators were hardly less damning of the US Government’s role in the talks, calling the Treasury’s input so far ‘marginal’ and demanding ‘more of an effort’ from their transatlantic oppos. Although the Obama administration has got its hands full coping with domestic problems just now, and probably can’t spare much time for this European sideshow.
Talks are expected to resume today or tomorrow, which makes it increasingly unlikely that anything much will be resolved before the weekend and that looming Chapter 11. The situation is further complicated by the fact that Fiat is also seeking to acquire a stake in another US carmaker, Chrysler. Even the legendary Fiat dealmaker Gianni Agnelli would be impressed by the size of current CEO Sergio Marchionne’s ambitions.
But neither potential buyer is likely to be too fazed by the delay. The worse GM's state by the time they come to talk turkey, the better price they will be able to negotiate. After all, that’s business.
In today's bulletin:
FSA planning for worst recession in 60 years
Psst, wanna buy a car maker? Vauxhall jobs in balance as GM talks stall
Nestle encourages staff to take a long walk
Editor's blog: Recession puts wind in bean sales
Nick Hood: Wall Street worries about crypto-Communism