Russian authorities threaten legal action over General Motors U-turn
In an alarming development it has been revealed that the Russian authorities are considering potential legal action against General Motors after the decision to withdraw the GM Europe subsidiary from the market. A deal was all but signed with Canadian outfit Magna, with a Russian banking partner providing the finance. However, the deal has now unravelled and General Motors will be retaining the operation for the foreseeable future.
Despite the fact that no definitive contract appears to have been signed regarding the sale of GM Europe, the Russian authorities are furious that such a prime asset has been withdrawn from the market place. Whether the potential threat of legal action will be forthcoming remains to be seen with Magna suggesting it is unwilling to put its current trading relationship with General Motors at risk.
There is no doubt that significant time and money has been spent on the potential acquisition of GM Europe and the decision to withdraw the subsidiary from the marketplace has received mixed responses across Europe. Unions in the UK have initially welcomed the move as they believe it will protect jobs in the short to medium term although the long term situation is very much different. The fact General Motors was willing to let the business go does not exactly breed confidence in the future.
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