Opel and Vauxhall to go to Magna

Opel and Vauxhall employ 54,500 people in Europe

General Motors (GM) has announced that it has chosen the Canadian car parts manufacturer Magna to buy Opel and its sister company Vauxhall.

The decision was welcomed by German Chancellor Angela Merkel, who said she was "very pleased" about it.

Magna, which is backed by Russia's Sberbank, has said that it will keep all four German plants open.

But British unions have expressed concern about the future of Vauxhall's 5,500 UK workers.

A spokesman for Magna said that the company is committed to keeping open the Ellesmere Port plant, where the Astra is made.

Uncertainty continues

He added that the company plans to honour its existing contract to produce vans in Luton until 2013 and will try to find a way to keep the plant in production after that date.

"The uncertainty surrounding the ownership of Vauxhall is now over, but the uncertainty surrounding the long-term future of Britain's plants will continue," said Tony Woodley, general secretary of the Unite union.

"We need to make sure that British plants and people are not treated disproportionately during the restructuring that will take place."

GM will be selling a 55% stake in the new Opel to Magna and Sberbank. Employees will hold a 10% stake and GM will keep the rest.

A statement from GM said that several key issues still needed to be finalised, including written agreement from unions to support its cost-cutting programme.

GM said it also needed to finalise a financing package from the German government.

Woodley reacts to GM's decision

The carmaker will give more details of the deal at a news conference later in the day.

BBC business correspondent Martin Shankleman said that this was the option that the GM board appeared to be resisting.

The UK unions were also against it as they feared the UK could be at the forefront of any job losses, he said.

UK unions favoured GM keeping control of Vauxhall - saying this would be the best news for British jobs.

'Considerable boost'

Chancellor Angela Merkel said that "patience" during the long-running discussions had led to a decision being reached.

BBC Berlin correspondent Steve Rosenberg said this was a victory for the German chancellor who had staked her reputation on closing the deal.

It is a considerable boost for her and her centre-right party just two weeks before the national election, our correspondent said.

See GM production centres in Europe Enlarge Map

The German-led Opel Trust has controlled the European operations since GM sought bankruptcy protection in the US in June this year.

It contains representatives from GM, the German federal government and the German states that contain Opel plants.

The rival offer came from the Belgian investment group RHJ.

Opel employs a total of 54,500 workers across Europe, with 25,000 based in Germany.

Its Vauxhall brand employs 5,500 people in the UK, primarily at its two British plants in Luton and Ellesmere Port.

GM in the US emerged from 40 days of bankruptcy protection in July, based on a plan involving disposing of many of its brands. It is now 61% owned by the US government.

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