Aug. 5 (Bloomberg) -- General Motors Co.’s opposition to Germany’s choice of a buyer for Opel is weakening and Chancellor Angela Merkel must now step in to remove the final obstacles to a deal, state officials and a labor leader said.

While Germany backs Magna International Inc. to buy Opel, GM chief negotiator John Smith has said a bid by Brussels-based investor RHJ International SA offers a “simpler solution.” GM’s stance is shifting and it is “high time” for Merkel to apply political pressure to persuade GM to accept Magna’s bid, Hendrik Hering, economy minister of Rhineland-Palatinate, one of four German states with Opel plants, said in an interview.

“There are only a few open issues between Magna and GM, they can be solved within a few days if the political will is there,” Hering said. “I expect a basic agreement between the U.S., GM and Germany by the end of this week.”

Merkel’s coalition, facing national elections on Sept. 27, agreed to back Opel’s sale with 1.5 billion euros ($2.2 billion) in short-term loans in May, picking Magna as the preferred bidder to protect jobs. Government officials hosted talks in Berlin yesterday with GM’s Smith and the bidders, and asked both suitors to improve their offers.

The negotiations made “clear progress,” Deputy Economy Minister Jochen Homann told reporters after the meeting. “All parties confirmed that they see themselves in a position to reach an agreement by the end of the week. For our position, we made very clear that we want more money from the investors.”

Recommendation ‘Shortly’

GM aims to complete an evaluation of the final offers and make a recommendation to the trust that controls 65 percent of Opel “shortly,” it said in a statement.

GM Chairman Ed Whitacre wouldn’t comment on when he expects a resolution of talks on Opel during a conference call with reporters today.

“It was a good meeting,” Magna Co-Chief Executive Officer Siegfried Wolf told Bloomberg. “I had a good feeling.”

The U.S. government is exerting influence on GM to soften the Detroit-based carmaker’s opposition to Magna because Germany and the U.S. would be heading for a “serious confrontation” if GM endorses RHJ, said Klaus Franz, Opel’s top union leader.

“The Americans have now realized that they’re up against an overwhelming coalition of Germany’s federal and state governments as well as unions,” Franz said in an interview. “It’s inevitable that Merkel will have to be involved.”

The U.S. government isn’t applying pressure on GM and as an observer isn’t in direct discussions with the bidders, according to an Obama administration official.

‘Clarify the Issues’

Merkel, who is vacationing in the Italian region of South Tyrol, is due back at work on Aug. 10. A government spokesman said Germany is seeking a solution for Opel at all levels. No specific talks between Merkel and President Barack Obama are planned, the spokesman said.

GM’s 13-member board, overhauled with seven new directors after bankruptcy, completed its first meeting yesterday without a recommendation on Opel.

“Progress was made clarifying issues from the best and final offers received two weeks ago,” GM said in its statement following the Berlin talks, without giving details.

In a July 28 blog, Smith wrote that Magna’s offer contained “elements” around intellectual property and Russian operations that “simply could not be implemented.” While saying GM didn’t have an official preference, Smith said RHJ’s bid was “completed” and would be “easier to implement.”

Loan Guarantees

RHJ offered about 275 million euros in exchange for a 50.1 percent stake in Opel and asked for state loan guarantees of 3.8 billion euros.

Under Magna’s proposal, its partnership with Russia’s OAO Sberbank would invest about 500 million euros for a combined 55 percent stake in Opel. The plan calls for 4.5 billion euros in loan guarantees. Magna and Sberbank would each own 27.5 percent of Opel, leaving GM with 35 percent, and Opel workers holding the remaining 10 percent stake.

Merkel may discuss Opel with Russian President Dmitry Medvedev on Aug. 14 when she meets with him in the Black Sea resort of Sochi, German government spokesman Klaus Vater told reporters in Berlin today.

Arnaud Denis, a spokesman for RHJ, declined to comment. RHJ’s assets include some former holdings of Ripplewood Holdings LLC, the private-equity firm founded by Timothy Collins. Daniel Witzani, a spokesman for Magna, didn’t return calls.

‘Major Concessions’

Magna, Canada’s biggest auto parts supplier, has made “major concessions” that are likely to sway GM in its favor, according to Juergen Reinholz, the economy minister of Thuringia state, where Opel employs about 1,800 workers. Of GM Europe’s 55,000 jobs, about 25,000 are in Germany.

“Magna has already given in on GM’s Chevrolet brand and wants to contribute more cash to Opel,” Reinholz said. “I’m certain that GM will finally take this into account.”

GM’s talks with Magna have been hindered by Magna’s demands to control distribution of the Chevrolet brand in Russia and to use the U.S. automaker’s intellectual property for purposes not included in the original agreement, people familiar with the matter have said.

To contact the reporters on this story: Andreas Cremer in Berlin at acremer@bloomberg.net; Brian Parkin in Berlin at bparkin@bloomberg.net.

Last Updated: August 5, 2009 08:38 EDT