GM favors Magna's bid for Opel

DETROIT, May 21 (UPI) -- General Motors Corp. is leaning toward a deal to sell its German car producer Opel to Magna International Inc., sources close to the discussions said.

GM favors the deal with the Canadian auto parts supplier over a bid submitted by Italy's Fiat SpA in part because of bad blood between GM and Fiat, The Detroit News reported Thursday.

In 2005, Fiat demanded GM pay $2 billion when an option to buy the Italian auto company expired. Executives at GM still resent the outcome of that deal, the newspaper said.

GM executives also believe Magna is less likely to close plants and cut employees than Fiat, which has been hustling to build up its production capabilities and figures to walk away with a large share of Chrysler LLC, when Chrysler emerges from bankruptcy court.

The third bidder for Opel, which sells cars in Britain under the name Vauxhall, is New York private equity firm Ripplewood Holdings.

GM has ranked Ripplewood's bid ahead of Fiat's, the News said.

GM spokesman Tom Wilkinson said the company was "declining comment on any of the proposals at this point."