RHJ's offer for GM Europe sees up to 10,000 jobs at risk

RHJ International's €275m (£238m) bid for GM Europe, which includes Opel in Germany and Vauxhall in the UK, will be formally submitted on Monday.

The proposal contains plans for 10,000 job cuts, Leonhard Fischer, the chief executive of the Belgian private equity group said, adding to concerns that Vauxhall's 5,000 workers could be under threat.

RHJ, a holding company for US group Ripplewood, has gained considerable ground in the race for GME recently. Magna, the Canadian car parts maker that is the preferred bidder, is also the German government's favourite, but negotiations with GME's US owner have run into difficulties over intellectual property.

Although RHJ was rejected by GM in May, the group confirmed at the start of the week that it had come back with a revised offer. However, it is understood attempts to engage with German government officials this week have met with resistance.

GM is expected to conduct its own discussions with both German federal and state governments, and other European countries, next week.

Although 10,000 jobs will go under RHJ's plans, all four of GME's Opel plants in Germany will remain open, Mr Fischer said. RHJ's offer includes payment of €275m for a 50.1 per cent stake in GME, plus a request for €3.8bn-worth of government funding. The staff cuts will save the new group €800m per year.

Speculation has raged over the future of Vauxhall's two factories in Luton and Ellesmere Port. Lord Mandelson, the Business Secretary, has said that the UK government is willing to provide funding for the GME sale. Although some job cuts are expected at Vauxhall, the Government is trying to bargain for the majority to remain.

The third bidder in the running for GME is Beijing Automotive Industry Corporation (BAIC). Initially a dark horse, BAIC has now tabled a firm €660m proposal that includes plans for a $2bn Opel factory and 400-strong dealership network in China.