Published: Tuesday, 3 Nov 2009 | 8:40 AM ET

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Opel's labour force has agreed to contribute 265 million euros ($390 million) in annual savings if General Motors finally sells a majority stake in its European arm to a group led by Canada's Magna.

"The cuts are painful for us all, but we are prepared to assume responsibility," Opel labor leader Klaus Franz said in a statement on Tuesday announcing the accord with Magna after weeks of talks with workers across Europe.

The agreement on behalf of 50,000 Opel staff — around a fifth of whom are supposed to lose their jobs under the new owners — moves the sale of Opel a step forward, but GM's board of directors still has to give the final green light this week.

Under pressure to shrink back to profit now that the U.S. carmaker has emerged from bankruptcy, GM's board has already agreed once to sell a 55 percent stake in loss-making Opel to Magna and its Russian partner Sberbank.

But EU competition authorities have asked GM to confirm it would make the same decision knowing that 4.5 billion euros in state aid promised by Germany would go to any buyer of Opel, not just Magna, Berlin's favoured bidder.

GM Chief Executive Frederick "Fritz" Henderson has expressed confidence that a sale will go ahead soon, but the new board that oversees GM since its emergence from bankruptcy in July has refused to act as a rubber stamp for management desires.

A source told Reuters last month that there was still a possibility that GM's board could opt out of a sale of Opel in favour of keeping the European carmaker.

Push into Russia

Magna's deal with labor calls for avoiding plant closures or forced layoffs at Opel, which was ringfenced and propped up with German aid to keep it out of GM's dip into bankruptcy.

Opel workers are set to get 10 percent of the company in return for cost concessions, while GM would hold 35 percent.

Closing the Opel transaction awaits crucial details on financing, including nailing down details of aid sought from states with Opel plants such as Britain, Spain and Belgium.

The European Commission is keeping a close eye on the deal to ensure state aid is not misused for political purposes.

Magna's group has vowed to inject 500 million euros into Opel and use it for an aggressive push into the Russian market.

Sealing the deal would be a coup for Magna founder and Chairman Frank Stronach, who left his native Austria at age 21 as an impoverished toolmaker but went on to build one of the world's biggest car parts group.

It would also mark a milestone in the dismantling of GM, the 101-year-old U.S. company that was unseated last year as the world's largest automaker by Toyota Motor Corp.

Opel, founded in 1863 and which GM bought in 1929, is the backbone of General Motors' European business.

Opel and British sister brand Vauxhall saw sales in Europe fall 11.4 percent in the first three quarters of 2009 to around 828,000 units, reducing its market share to 7.6 percent from 8.0 percent a year earlier.

At that rate its 2009 sales could reach around 1.1 million units. Opel's big products are the Astra compact and Corsa small car, both of which sold over 400,000 units in 2008.

GM relaunched out of bankruptcy with $50 billion in funding from the U.S. government, which now owns about 60 percent of carmaker.

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