General Motors told the German government on Thursday that it had decided to sell a majority stake in its European operations as initially agreed — on condition that the government and labor unions pledged to help with the “necessary” restructuring. After months of negotiations the US automaker said it was sticking with the tentative sale agreement for its struggling Opel and Vauxhall units.

The accord was initially reached in late May, but it had been thrown into doubt in recent weeks after a revitalised GM emerged from bankruptcy protection in the United States.

Under the deal, Magna International, a Canadian-Austrian auto parts and engineering company, and Sberbank, its Russian partner, will purchase a 55 per cent stake in Opel, based in Germany and the main GM operation in Europe, as well as Vauxhall, which is based in Britain. GM would keep a 35 per cent stake, while Opel’s employees would be provided 10 per cent.

In a statement, however, GM said that “several key issues” remained to be settled over the next few weeks, “including the written support of the labor unions to support the deal with the necessary cost restructuring for viability, and the completion of a definitive financing package from the German government.”

Under the original terms reached in May, the German government was to provide$6.5 billion in loan guarantees. In return, Magna, which was putting up 500 million euros, agreed to keep all the Opel factories in Germany open.

German chancellor Angela Merkel, who is seeking re-election on September 27, was quick to claim credit for clinching the deal that Opel employees had campaigned for, even though she had, at times, been skeptical of government rescues during the crisis.

... contd.