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General Motors in last-minute turnaround on European division

General Motors has stunned the market with news that GM Europe will be sold to Canadian car parts company Magna, which will be part financed by Russian money. This goes against the earlier rumours which General Motors had introduced to the market with a strong suggestion that the operation be retained by its US parent company unless European governments were willing to invest money into the operation.

The decision is a very important one for the German government which has for some time been pushing for a disinvestment from General Motors although there is some controversy regarding the preferred bidder, Magna. The news may not be good for UK workers at the company's Vauxhall subsidiary as many expect Magna to make significant cuts in the short to medium term to both increase efficiency and reduce overheads.

While the UK government has in public been supporting a bid by Magna many believe the preferred option for the UK workforce would have been the retention of the business within General Motors as there would have been less likelihood of job cuts. While no deal has yet been struck with Magna it is thought that terms and conditions have already been discussed and it looks like a "done deal" by any other name.

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