Fiat, Magna race for Opel

As things stand, either Italy’s Fiat SpA (BIT: F) or the Canadian automobile parts manufacturer, Magna International Inc (TSX: MG) would takeover Opel.

German Chancellor Angela Merkel conducted a key meeting with cabinet ministers and governors of the German states where Opel has its manufacturing plants. Representatives from General Motors, U.S. Treasury and bidders for Opel were also present for the meeting.

GM pushing its agenda
The discussions that lasted through the night ended in a stalemate after General Motors astonishingly threw up a new cash demand of euro300 million ($418 million) in short-term cash for Opel.

Roland Koch, governor of Hesse state expressed his displeasure at GM’s conduct. He said, “What the Americans are doing here is not acceptable. They are ignoring the situation in Europe and attempting to push their agenda."

Magna slightly better positioned
Fiat and Magna have been asked to rework their respective strategies and figure out how they would meet the additional short-term cash needs of Opel. The plans, outlining the line of attack, are expected by Friday.

Although there is very little to choose from between the two automakers, Magna may just pip fiat given its willingness to bear the additional cash burden.

German finance minister, Peer Steinbrueck, said, “I was very pleased to see that Magna wants to be helpful in solving this additional cash problem, that seems very attractive."

About Opel
Opel, which began operations as a manufacturer of sewing machines, diversified into the automobiles sector in 1899. After its acquisition by GM in 1929, it continued to operate as the latter’s subsidiary.

Part of GM Europe, Opel has been wrestling with quality issues, a factor that is eroding its market share. Now that its parent company, GM, is likely to file for bankruptcy protection in the imminent future, Opel is desperately scouting for a buyer.