General Motors is reconsidering its bailout plans for Opel/Vauxhall business in Europe. The company blew past an August 21 deadline to find a preferred bidder for a controlling stake in the business.

Opel deal had been a bipartite race between two suitors, Canada-based auto parts supplier Magna International (MGA) — backed by Russia’s Sberbank — and Brussels-based industrial investment group RHJ International. Of them, GM’s Board of Directors rejected Magna’s offer on August 21, and RHJ International was opposed by the German government with an apprehension of higher job losses.

GM’s board has now instructed its management to consider new options for Opel, including putting together a $4.3 billion financing plan to rebuild the business rather than divesting it. The company intends to raise funds for the unit from the U.S. and other European governments, including the U.K. and Spain. The company is also vying for a less-likely option, that is, liquidation of the business.

Political factors are playing a key role in the deal. Both Germany and Russia are in favor of Magna. This is because Magna has vowed to make most of its job cuts outside Germany if it wins the deal. On the other hand, any support from U.S. Government for the unit would imply U.S. taxpayers bailing out a German company, which could be negative for the U.S. political scenario.

GM requires clearance from Opel/Vauxhall Trust Board, which holds a 65% stake and a German Government task force for the deal to go through. The five-member Trust Board set up in June includes two voting representatives of the German Federal and Regional Governments and two from GM. On Tuesday, GM’s chief negotiator John Smith met German Government’s Opel task force without releasing a statement.
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