Magna shares rev higher on collapse of Opel deal

TORONTO (Reuters) - Shares of Magna International Inc (MGa.TO: Quote, Profile, Research) were up more than 7 percent on Wednesday, a day after General Motors Co reversed its decision to sell a majority stake in its European unit to a Magna-led consortium.

Shares of the Canadian auto parts company were up C$3.17, or 7.37 percent, at C$46.17 around noon on the Toronto Stock Exchange.

GM's board said on Tuesday that it decided to keep Opel for strategic reasons and as improving business conditions made the German-based operation more viable.

Magna and Russian partner Sberbank (SBER03.MM: Quote, Profile, Research) were going to inject 500 million euros ($742 million) into Opel in exchange for a 55 percent stake in the struggling automaker. After months of negotiation, two sides had reached a tentative agreement on the sale, supported by the German government.

GM was relaunched out of bankruptcy in July thanks to more than $50 billion in U.S. government funding and nearly C$10 billion ($9.4 billion) from the governments of Canada and the province of Ontario.

The loss of Opel may be a good thing for Magna, as the there was a lot of negative sentiment among investors around the deal and this may remove some of that, said a representative of one of the company's major shareholders, who asked not to be named.

"I think the street was concerned that Magna would have to sink money into it and the street was concerned that it would distract Magna from focusing on gaining market share on the supplier side and consolidating the supplier base," said the investor, who was actually in favor of the deal going through.

(Reporting by John McCrank; editing by Rob Wilson)