Ever heard of an auction where the seller's chief negotiator writes a blog post complaining that a bidder has submitted a proposal inconsistent with the negotiations that led up to it -- the day after a provider of financing for the deal announces that the same bidder has increased the amount of money it's willing to invest in the target?
Didn't think so. But then, there haven't been many auctions like the one for the Adam Opel GmbH unit of General Motors Co. We've commented before on the way that GM's global restructuring and the participation of the German government at federal and state level have made this an
unusually public process.
Now, as it nears the finish line, it's getting even more so -- to the point where the German government has just
asserted its right to have the final say in the process, according to Bloomberg.
The
blog post -- by GM group VP John Smith -- appeared Tuesday on the official GM Europe blog, under the headline "Clearing the Air." Smith described GM's problem with the current proposal from lead bidder Magna International Inc. (NYSE:MGA) and its Russian partners, Sberbank and OAO Gaz, as compared with the one from private equity firm RHJ International. The one from RHJ, he said, would be easier to implement.
Since German taxpayers must put up money for either deal -- and since politicians favor the Magna bid as being likely to preserve more jobs -- Smith has to be circumspect. But you can sense his frustration when he complains that the Magna bid "contained elements around intellectual property and our Russian operations that simply could not be implemented."
A more colloquial rendering (in a less public setting) might go something like this: Hey, guys: We've spent many hours on this issue. It's been all over the press, for crying out loud. So what the #*&*!! is the big idea putting it in the bid at this point?
Ah, but then there's Magna -- also negotiating in public -- playing to the unions and politicians. Which may be why it was Roland Koch, the governor of the German state of Hesse, who on Tuesday said that
Magna was prepared to put
€350 million ($493 million) into Opel after its deal closed, a big improvement on the €100 million initially planned, according to the Canadian Press.
A bump-up in post-deal investment has obvious appeal for Koch and his constituents, but it doesn't seem to be the big issue for GM, though it would retain a 35% stake.
Wonder what GM's
heavyweight new board -- led by former AT&T Inc. (NYSE:ATT) CEO Ed Whitacre and including a couple of big names from the private equity world -- is thinking about all this? They might like the idea of GM eventually buying Opel back from RHJ as much as Germany's economics minister
dislikes it.
As Bloomberg points out, the potential for a clash between GM and the German government is growing steadily, and with it, the possibility of an appeal by the German government to the U.S. government. GM's principal owner, you'll recall, has vowed to let the board run things without political interference. -
Kenneth Klee
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