Will GM Really Sell Opel?

Speculation is swirling that General Motors might not sell its German division, Opel/Vauxhall, after months of negotiations with potential buyers and the German government.

But at least one key person, the head of the trust created by the Germans to help run Opel, says it’s nonsense to talk about GM, which is now majority-owned by the U.S. government, keeping its German brand. “They just have to get their house in order, and I think they definitely know this,” Fred Irwin told Bloomberg in a telephone interview. “GM cannot be too sidetracked with foreign markets.”

GM needs to trim down and get some profits rolling in from the U.S. so it can repay the money the taxpayers have floated the automaker to keep it from going under, Irwin said.

What Irwin says is pretty important, because Opel is operating thanks to a $2.1 billion loan from the German government and is controlled by the trust Irwin heads, pending sale.

So far, a group headed by Canadian auto-parts maker Magna International and including Russia’s Sberbank is competing with RHJ International SA to get ahold of the automaker.

But there have been reports that GM might not want to sell its German division after all. The Wall Street Journal reports this morning that GM’s new board has directed management to come up with a plan to pull together $4.3 billion in new financing to keep the unit and juice it up a bit, rather than selling it.

Sources tell the Journal that the board has directed CEO Fritz Henderson to come up with the plan after rejecting the CEO’s recommendation that GM accept the Magna group’s bid.

The Germans are willing to help finance the Magna deal, and the Russian government has also made positive noise about it.

The governments haven’t been nearly as enthusiastic about RHJ International SA, a Belgian private equity group, and its bid. The Germans think a Magna deal would mean fewer German workers laid off.

Though the U.S. government has a majority stake in the automaker, and the administration has appointed some directors, a spokesman for the Obama administration tells the Journal the administration is staying out of the Opel decision, at least for now.

Of course, all of this could just be a big game of poker on the part of the GM directors. Could they get a better price by holding out? Just maybe.