18 Oct 2009

German minister defends carmaker deal

2:15 pm on 18 October 2009

European Union concerns about the sale of carmaker Opel to Canada's Magna do not put the deal at risk, Germany's economy minister says.

Karl-Theodor zu Guttenberg is quoted by the BBC as saying the deal was "on track" and ministers could address EU doubts.

The European Commission warned on Friday that planned state aid for Opel might breach competition rules.

Competition commissioner Neelie Kroes pointed to "significant indications" that the 4.5 billion euro aid to Opel was subject to the precondition that a Magna was selected as buyer - a stance that would run counter to EU competition rules.

Asked whether the concerns could doom the sale to Magna, Mr Guttenberg said: "No, I don't believe that."

GM picked Magna and its Russian backer Sherbank last month to buy Opel and Opel's UK brand Vauxhall, but the deal has yet to be concluded.

Opel currently employs about 50,000 people across Europe, including 5,500 at its Vauxhall business in the UK and 25,000 in Germany.

Magna is proposing 10,500 job cuts in total at Opel, including 4,500 in Germany and 600 in Britain.