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October 24, 2009

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GM holds back on stake deal with Magna group

GENERAL Motors put on hold a deal to sell a 55-percent stake in car maker Opel to a Russian-backed consortium led by Canadian automotive group Magna, GM's chief negotiator on the deal said yesterday.

No sale can proceed until the United States car maker's board of directors discusses the Opel deal at a meeting on November 3, chief negotiator John Smith said in a blog entry, pouring cold water on hopes that the sale contract could be signed this week.

"Given the significance of the Opel transaction, GM's board will soon meet in its regularly monthly meeting to consider Minister Guttenberg's letter and changes to the Magna/Sberbank proposal that have occurred since its last review on September 9," Smith said in the blog.

He was referring to German Economy Minister Karl-Theodor zu Guttenberg's request to GM -- prompted by European Union concerns about promises of German state aid -- to confirm the car maker chose Magna for business and not political reasons.

In the meantime, the company would work to resolve remaining open points with the Magna/Sberbank proposal, including labor cost cuts and a plan to obtain 4.5 billion euros (US$6.8 billion) in aid sought from states with Opel plants.


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