M&A

5 November, 2009

UK's Mandelson says GM decision benefits taxpayers

BRUSSELS, Nov 5 (Reuters) - U.S. carmaker General Motors' [GM.UL] decision to keep its European unit Opel will benefit European taxpayers, especially in Britain, Germany and Spain, British Business Secretary Peter Mandelson said on Thursday.

He said he believed workers at GM's Vauxhall unit in Britain would prefer to keep the same management rather than have new owners, but gave no details of how the restructuring of the company would be financed.

GM scrapped plans on Tuesday to sell Opel, including its British Vauxhall plants, to a group led by Canadian auto parts supplier Magna (MGa.TO).

"Now this is creating uncertainty and some fresh fears amongst Opel and Vauxhall workers," Mandelson told Brussels-based reporters in a video link-up from London.

"On the other hand it will be a significantly less costly deal for European tax payers, notably German, British and Spanish tax payers."

Germany had seen Magna and Russian partner Sberbank (SBER03.MM) as most likely to preserve as many German jobs and plants as possible.

Countries with Opel plants including Germany, Britain, Spain and Belgium were originally expected to provide aid for the rescue of loss-making Opel. GM said it expected restructuring Opel on its own would cost about 3 billion euros.

"I think our own Vauxhall workforce would prefer to keep with the management they know rather than take a chance with a management that they don't," Mandelson said.

"But whatever happens, we must see an appropriate, commercially based judgement being applied to redundancies which will take place in the context of restructuring," he said.

Mandelson said on Wednesday he wanted talks soon with GM on its plans for the business and how they will affect British plants and workers. Vauxhall employs about 5,500 people.

He called on Thursday for "a fair balance amongst those (EU) member state governments that will be underwriting the company financially and that, of course, is something that we have yet to discuss amongst ourselves and with the GM management." (Reporting by Timothy Heritage; editing by Simon Jessop)

Source: http://www.reuters.com