GM Adds Some New Steps to the “Chicken Dance”

In September 2009, I posted a blog entitled “Is the Chicken Dance Continuing or Is It High Stakes Poker?”  The focus of the commentary was to highlight the chicken dance GM was employing in the sale of Opel.   At that time, GM already had accepted an offer from Magna International, but appeared to be leveraging its position to obtain a higher price for its Opel and Vauxhall business units.

In November 2009, GM announced that it was not going to sell to Magna International and the consortium put together by Magna.  GM had decided to proceed on its own.  Apparently, proceeding on their own involved obtaining aid from several European governments.

Today, the Associated Press announced that “GM’s Opel withdraws European aid applications.”  Now it appears that, GM now believes the fact that they finally have reported a quarterly profit — even though they continue to lose money in Europe — they are in a position to take control of their own destiny without any government aid or any other party involvement.

This shows that the “chicken dance” can continue indefinitely if all of the parties do not understand the actions and antics that are being employed to gain power and position.  In this case, it appears that GM kept adding new steps to keep the dance in motion until such time as they could bypass the bidders, the politicians and the governments and take control of their own destiny.

Makes you wonder if they ever really had any intention of selling Opel and Vauxhall!

Is the Chicken Dance Continuing or Is It High Stakes Poker?

According to the latest report by Reuters, the stakes in the bidding game for GM Opel have just gone up as RHJ International  has increased its bid against Magna International.  In addition, both political parties have been fighting over Opel to try and gain some ground from this issue.

Not only that, but there’s speculation that no decision will be forthcoming until after the general election in Germany, later this month, as a result of the political implications associated with employment.

Given the fact that GM already had agreed to the Magna deal in July proves that the chicken dance continues with all parties still on the dance floor!

Can You Top This Chicken Dance?

GM’s efforts to find a buyer for its Opel unit in Germany are starting to look like the world’s biggest chicken dance.

Here are the key players:

• German Foreign Minister Frank-Walter Steinmeier, who reportedly has indicated that the government guarantees would be linked to long term employment guarantees
• Magna International, an entrepreneurial auto parts manufacturer with roughly 250 manufacturing operations around the world.  Magna’s bidding partner is Sberbank, a Russian bank. Consistent with its historical approach,  Magna’s focus more than likely would be to expand and grow the business.
• RHJ International, a diversified holding company from Brussels, Belgium.  As opposed to Magna’s growth strategy, RHJ would focus more on cost cutting, profitability and shareholder returns.

To further complicate matters, on August 1st, Reuters reported that Opel Trust owns “65 per cent of the carmaker.”  The “Trust’s board is comprised of two GM representatives [who reportedly are leaning toward RHJ] and two for Germany [who reportedly favor Magna].”  If that doen’t make it interesting, the fifth board member “has no vote.”

Can’t you just imagine the positioning going on in the background?  Wouldn’t you love to be at the negotiating table taking part in this chicken dance?  I know I would.  It has all the elements of being the biggest and best chicken dance of the year!

If you have a better one I’d love to hear from you.