May 27 (Bloomberg) -- German Chancellor Angela Merkel will be pressed to choose Magna International Inc. as the buyer of General Motors Corp.’s Opel division, even after the minister leading efforts to rescue the unit said all bids came up short.

Merkel will host talks tonight in Berlin as bidding reaches what she called a “kind of climax.” Unions, Merkel’s coalition partners and politicians from her own party urged her to opt for Canadian auto-parts supplier Magna over Italy’s Fiat SpA and a third suitor, RHJ International SA. It’s an election year and Magna may preserve more of Opel’s 25,000 German jobs.

Merkel’s options are dependent on the U.S. administration’s moves as GM gets a step closer to bankruptcy after failing to secure bondholders’ backing to swap their claims for stock. Aurora, Ontario-based Magna, seeking as much as 5 billion euros ($7 billion) in European loan guarantees, is partnering with OAO Sberbank, Russia’s biggest lender, and carmaker OAO GAZ.

“Certainly not everything can be decided and will not be decided today,” Thomas Steg, a deputy government spokesman, said at a news conference in Berlin today. “It’s rather unlikely that future talks will be conducted with a single investor. Instead, what’s more likely is that these talks will be conducted with at least two investors.”

Chinese Bidder

Adam Opel GmbH, the unprofitable carmaker that has its headquarters in Ruesselsheim outside Frankfurt, has been a unit of Detroit-based GM for 80 years. GM has shifted all European assets, including plants, sales organizations and technology, to Opel to help with the disposal, Karin Kirchner, a spokeswoman for the U.S. carmaker in Zurich, said in a phone interview. The transaction didn’t include GM Europe’s debt, she said.

A bid by an unidentified Chinese investor came too late to be considered at tonight’s meeting, Steg said. The suitor may still be considered later, he said,

Beijing Automotive Industry Holding Co. submitted an expression of interest on May 21, a person familiar with the matter has told Bloomberg.

GM, propped up by $19.4 billion in emergency U.S. loans, failed to get 90 percent of bondholders to swap their claims for stock in advance of the June 1 reorganization deadline, the carmaker said today in a statement. Chief Executive Officer Fritz Henderson has said the automaker will seek bankruptcy protection if the company missed the acceptance target.

‘Orderly Insolvency’

Economy Minister Karl-Theodor zu Guttenberg said on May 15 that an “orderly” insolvency is an option for Opel. That would be anathema to union leaders, who don’t want to see Opel, which began as a manufacturer of sewing machines in 1862 and has been making cars since 1899, broken up. Magna is “in the clear pole position” for the acquisition, Klaus Franz, the top labor representative at GM Europe, said yesterday.

Roland Koch, prime minister of Opel’s home state of Hesse and a member of Merkel’s party, endorsed Magna’s bid in a May 23 interview, saying it offers the prospect of developing new markets and superior technology. Peter Struck, parliamentary head of the Social Democratic Party, Merkel’s coalition partner and main rival in the Sept. 27 election, said yesterday Magna’s offer was the best and “most realistic.”

Today’s talks involve Merkel, Guttenberg and the prime ministers of the four German states with Opel assembly plants as well as executives from the bidders. Officials from GM and the U.S. government will also take part in the negotiations.

Guttenberg has said he’s considering putting Opel in a government-backed trust until an agreement is reached with an investor. A decision will depend on whether the U.S. government will accept the trust model, Steg said.

‘Three Questions’

The federal government and the four states are providing 1.5 billion euros in bridge loans until a transaction is completed. Finance Minister Peer Steinbrueck said on ARD television today that “our timetable depends on decisions taken in the U.S. on General Motors.”

“Three questions have to be answered today: which investor would we prefer, what about the trust model and, as a result of that, the question of a bridge loan,” he said.

Fiat, Italy’s biggest manufacturer, plans to cut fewer than 10,000 jobs in Europe, including as many as 2,000 in Germany, according to two people familiar with its bid. The Turin-based company is seeking 6 billion euros in state loan guarantees.

Magna would eliminate 9,000 jobs in a takeover, Co-Chief Executive Officer Siegfried Wolf said May 22. Opel should expand in Russia because its market will be among the world’s fastest growing in coming years, Wolf has said.

Fiat Chief Executive Officer Sergio Marchionne lobbied Merkel at her Berlin office yesterday and declined afterward to say whether he’s confident of getting the nod.

Lottery

“It’s a lottery right now,” Marchionne said in an interview with Bloomberg Television yesterday. “I’m here seriously to try and get the deal done. If it gets done, it gets done. If not, I’m on a plane back to Detroit overnight.”

Economy Minister Guttenberg, who is overseeing government talks with investors, said yesterday that all suitors must make “improvements” to their offers.

“There’s no preferred bidder at the moment, absolutely not,” he said. “There is movement, but not enough movement yet and that’s the reason why I keep all options open.”

Opel also has carmaking plants in Belgium, Spain and Poland, while its Luton, England-based Vauxhall brand makes cars for the U.K. market. Belgian government leaders sent letters yesterday to the European Commission, the executive arm of the European Union, asking for intervention in the Opel sale to prevent Germany from dominating the transaction.

No Winner

Today’s sessions in Berlin, which starts at 9 p.m. local time, may produce no winner at all, said Stefan Bratzel, head of the Bergisch Gladbach, Germany-based Center of Automotive research institute.

“Merkel may seek to keep her options open for as long as possible,” Bratzel said in an interview. “I don’t think either Fiat or Magna will get the nod. The government isn’t entirely happy with either of the plans.”

Members of Merkel’s Christian Democratic Union have criticized Guttenberg’s willingness to talk down Opel’s chances of finding a suitable investor.

“It would be smart for us to focus on that and not constantly talk about terrible alternatives,” Hesse’s Koch, who is scheduled to attend today’s meeting, said May 25 on N24 television.

Putin Talks

Merkel held talks with Russian Prime Minister Vladimir Putin yesterday on “economic cooperation,” the Russian government said, four days after the chancellor called Putin to discuss Opel.

Struck urged the chancellor yesterday to examine Magna’s offer “very closely.”

“It’s important that the overriding goal will be reached, which is to safeguard all four German production locations and lose as few jobs as possible,” he told reporters in Berlin yesterday. I’m not sure whether Fiat’s concept meets these criteria.”

To contact the reporters on this story: Andreas Cremer in Berlin at acremer@bloomberg.net; Tony Czuczka in Berlin at aczuczka@bloomberg.net.

Last Updated: May 27, 2009 09:30 EDT