John Smith, the group vp who is General Motors Co.'s (NYSE:GM) chief negotiator for the sale of a stake in the company's Adam Opel GmbH unit, has some advice for people following this tangled auction: Don't believe everything you read in the press about it. Specifically, don't put much credence in reports that a deal with Magna International Inc.
(NYSE:MGA) and its Russian partners, Sberbank
and OAO Gaz, is close.
As has become his practice, Smith
makes his point in his blog. In a
new post on Thursday he reiterates his frustration with the negotiating tactics of Magna--the buyer favored by the German federal and state governments--and states his concerns over controlling the access of Magna's Russian partners to GM's intellectual property. On the latter issue he's quite clear:
One key point for GM is intellectual property, and this transaction
should not become a pipeline, shipping valuable intellectual property
to destinations unknown.Smith repeats another key point as well: the
rival bid, from
Belgian private equity firm RHJ
International, would be simpler and easier to implement. But this time he adds that analysis done by Lazard, adviser to the German government, leaves the clear impression that the RHJI bid is superior.
Meanwhile, with so many parties involved, the press reports continue to swirl. Also on Thursday the German business weekly WirtschaftsWoche came out with a
report that may owe a little something to John Le Carre.
As translated by Dow Jones (and Google) this report says that the U.S. government has told GM not to sell Opel to Magna if the deal would put patents, and especially military patents, in the hands of the Russians. The magazine says that around 5% of GM's annual revenues come from its defense business.
There are a couple of problems with this. Most obvious is the fact that GM sold off the last big chunk of its defense business to General Dynamics in 2003. So the 5% figure (which would come to $7.45 billion given GM's $149 billion in 2008 sales) sure looks wrong.
Secondly, on Wednesday U.S. auto task force chief Ron Bloom
vowed that the Opel sale is a decision for GM and that Washington would stay out of it.
Okay, the conspiracy-minded might say Bloom is being duplicitous. Or just that he doesn't have to intervene if Washington and GM agree anyway.
But as the saying goes, when you hear hoof-beats, why look for zebras? GM says it's worried about protecting its automotive IP in Russia, and frankly, why wouldn't it be? For a quick reality check on what can go wrong in business partnerships in Russia, it need look no further than BP plc's lengthy and
highly charged dispute over its BP-TNK joint venture. It was finally settled (sort of) less than a year ago.
Smith hasn't mentioned this on his blog but the way things are going, you never know. He says he'll have up updates over the next couple of weeks.-
Kenneth Klee
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Juergen Lasowski
And the winners are...
Don’t forget the (rich) Flemish (part of Belgium in Europe) government! BTW the most productive plant stands in Antwerp and the Germans want to close it for political reasons, so that their own people won’t lose their job.
I suppose this can be incorporated in the negotiations. For instance, the Flemish government could buy the Antwerp plant (from GM who owns it, thus directly, not from Opel!!!) and so GM gets much money...in exchange for the guaranty that the job discharges in Antwerp won’t be more than proportional.
Sorry for the German egoists!