Magna, Fiat improve bids as Opel battle heats up

By Nicola Leske and Andreas Moeser

FRANKFURT/BERLIN, May 24 (Reuters) - Magna International (MGa.TO: Quote, Profile, Research) and Fiat (FIA.MI: Quote, Profile, Research) have improved their offers for General Motors GM.N unit Opel ahead of a crucial week in which the German government is expected to decide which bid it backs.

German Chancellor Angela Merkel will hold a meeting of top minister on Monday to review bids from Magna, Fiat as well as Belgium-listed industrial holding company RHJ International (RHJI.BR: Quote, Profile, Research). No final decision is expected on Monday.

Italian Fiat improved its offer on Saturday after top German officials said on Friday that Magna, a Canadian car parts group, submitted a better plan than rivals. Magna has also improved its bid, a source close to the negotiations told Reuters on Sunday.

General Motors and the German government are in a race against time to finalise a sale of Opel, which is headquartered in Ruesselsheim near Frankfurt.

The U.S. government has given GM until June 1 to restructure its operations and prove it can be viable without state aid, or face probable bankruptcy. [ID:nN22365672] [nN22419679]

The decision on who gets Opel will be taken by GM but the German government will play a big role because it would likely supply billions of euros in financing guarantees.

Fiat chief executive Sergio Marchionne addressed fears of major job cuts in Germany and said his plan did not foresee a cut of Opel's workforce in Germany of more than 8 percent, a German weekly newspaper reported.

"In the worst case a maximum of 2,000 jobs would be affected by the integration of Opel into a debt-free joint venture with Fiat," Marchionne told Bild am Sonntag on Sunday.