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Why GM rejected the Opel sale deal
An excellent analysis (although with a strong anti-Russion government slant) on Craig Pirrong’s blog.
The key point is that this was never a gret deal for GM, as it involved the transfer of technology to a potential competitor. It was a deal agreed through desperation, as GM needed the money.
GM is no longer desperate to sell: its need for cash has reduced as a result of the US government’s “cash for clunkers” programme has boosted US car sales.
No one comes out of this looking very good. As the blog says:
Truth be told, there are no truly sympathetic figures in this saga. A company (GM) that wasted tens of billions of dollars in capital over decades. Its >overprotected, overpaid, unionized labor force. A government (Germany’s) >attempting to buy votes by subsidizing an industry plagued by overcapacity that >should shrink, and doing so in a beggar-thy-neighbor fashion, all the while >providing assistance to an opportunistic, corrupt Russian government and >business that has co-opted wide swathes of the German political and economic elite.
|The good news is that rejecting the deal is a sign of confidence by GM that it does not need the cash, and that it will not become so desperate again.
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