Accessibility links

Breaking News

Germany Picks Magna as Buyer for GM's Opel

The government of Germany has chosen a Canadian auto parts manufacturer to take over General Motor's German-based Opel unit.

German Chancellor Angela Merkel said Saturday that selling Opel to Magna International would protect Opel's assets from GM's anticipated bankruptcy.

German officials said Magna will use financing from Russia's state-owned Sherbank to take over Opel from GM.

GM is facing a June 1 deadline in the United States to restructure or declare bankruptcy.

Under the agreement, Magna would get a 20 percent stake in Opel and Sherbank would get a 35 percent share. GM would retain 35 percent, with the remaining 10 percent going to Opel employees. Magna has said it would need to eliminate at least 2,500 jobs in Germany.

Parliamentary committees in two German states, Hesse and North Rhine-Westphalia, must still approve the financing.

Meanwhile, a U.S. bankruptcy judge says he expects to have a decision Monday on a plan to sell a large stake in U.S. auto giant Chrysler to Italian carmaker Fiat.

Chrysler has said it is the only way to avoid totally liquidating the company, which would lead to massive job losses.

But the plan would still close nearly 800 dealerships and lose money for a number of Chrysler's creditors and others. If the plan is approved, they are expected to appeal.

General Motors is also negotiating for its life to avoid bankruptcy by the June 1 deadline.

GM employees, who are members of the United Autoworkers Union, ratified an agreement Friday that will cut labor costs in the hope of keeping the company in business.

At the White House Friday, President Barack Obama's chief spokesman said there have been encouraging signs from the ongoing negotiations between GM, its workers and its debt holders. The spokesman Robert Gibbs says the hope is that GM will emerge from the process as "a viable auto company."

Some information for this report was provided by AP and Bloomberg.