Frank Stronach says Magna International Inc. MG.A-T does not plan to buy the rest of Opel, a signal to Magna's customers that he's not in competition with them.
“We did not want to have control because we want to demonstrate to our regular customers that we don't want to compete with them,” the founder of the Canadian auto parts giant told Business News Network just hours after winning control of the European auto maker.
Under a deal unveiled in Berlin after several months of negotiations, Magna and its Russian partner will own 55 per cent of Opel, General Motors Co.'s European unit.
Mr. Stronach added he would like to see an Opel factory built in Canada one day.
Magna will be permitted to build and sell Opel vehicles in Canada beginning in the fourth quarter of 2012, GM vice-president John Smith, who headed the auto maker's side during the negotiations, said Thursday.
But the U.S. market is off limits, which means it's not likely a Canadian plant will be built soon, Mr. Smith said, because the Canadian market is too small to for an auto maker to have an assembly plant supplying just this market.
Mr. Stronach said, however, that he wants to build Opel models in Canada and hopes eventually to gain access to the U.S. market.
The Opel deal does not affect any plans Magna might have to assemble electric vehicles in Canada, he said.
Mr. Stronach, who flew back to Canada Thursday morning after being in Germany Wednesday, said he would celebrate first with a “good glass of water” then probably a glass of wine at lunch Thursday at the Magna Golf Club in Aurora, Ont.
GM said its board of directors supported a bid from the Canadian auto parts giant and its partner, Sberbank, to buy a majority stake in GM's European operations.
“The hard work over the past two weeks to clarify open issues and resolve details in the German financial package brought GM and its board of directors to recommend Magna/Sberbank,” GM president and chief executive officer Fritz Henderson said in a statement.
The announcement marks a victory not only for Magna and its founder Frank Stronach, but also for German chancellor Angela Merkel, who faces national elections later this month.
Ms. Merkel had backed the Magna group from the onset, only to learn that GM, Opel's parent, had serious misgivings about the Canadian-Russian proposal. Magna's partner is state-controlled Sberbank, Russia's biggest commercial lender.
“I am exceptionally happy about this decision, which is along the lines of what the government wanted,” Ms. Merkel said.
GM said it will retain a 35 per cent stake in Opel, with employees taking 10 per cent. While Magna and Sberbank will have the majority stake – 27.5 per cent each – GM insisted it will retain considerable influence over Opel and Vauxhall, Opel's sister brand in Britain.
“The agreement will keep Opel/Vauxhall a fully integrated part of GM's global product development organization, allowing all parties to benefit from the exchange of technology and engineering resources,” GM said.
The Opel Trust board has approved the sale. The board vote of the German trust that now holds Opel was not unanimous, though, with two members voting in favour of the Magna-Sberbank proposal, one opposing and one abstention.
Fred Irwin, chairman of the Opel trust, said he opposed the Magna proposal because Magna would contribute only a small portion of the equity in the new Opel, with German taxpayers bearing most of the risk. He said he thinks Opel faces an uncertain future because it produces only 1.5 million cars year – small by global standards – and has a high cost structure. “I do not believe this is a way to build a future-enabled company,” he said.
