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GM cancels Vauxhall sale

04/11/2009

Vauxhall-Opel's US parent, General Motors (GM), has reversed its decision to sell the European carmaker, citing "an improving business environment".

The about-turn has come as a surprise to many, given that a deal to sell the maker to Canadian parts firm Magna had been under discussion for months. In October, Unite - the union representing workers at Vauxhall's two major UK plants - said that it had reached agreement with Magna on the future of Vauxhall's 5,500-strong UK workforce, which would face no compulsory redundancies.

Announcing the board's change of mind, GM president and CEO Fritz Henderson explained: "While strained, the business environment in Europe has improved.

"GM's overall financial health and stability have improved significantly over the past few months, giving us confidence that the European business can be successfully restructured."

Magna co-chief executive Siegfried Wolf acknowledged the decision, adding that the company would "continue to support Opel and GM in the challenges ahead".

However, the change of plan has caused anger in Germany, where Vauxhall/Opel's operations are based. A spokesperson for the German government said that it regretted GM's decision, and expected the firm to repay 1.5 billion euros in bridging loans provided by German state banks. Economy minister Rainer Bruederle was less reserved, branding the episode "totally unacceptable".

Unite's joint general secretary, Tony Woodley, described events as an "incredible turnaround", adding that the union would negotiate with GM over its restructuring plans.

"This is a massively significant development and a far better deal for Britain. We expect our Government to do all it can to support it," he said.

Business Secretary Lord Mandelson - credited by Unite as 'pivotal' in the earlier deal to protect Vauxhall's plants - said that he was keen for "very early discussions" with GM over how its plans would affect UK workers.

He added: "I have always said that if the right long term sustainable solution is identified, then the Government would be willing to support this."

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