General Motors Co. said Tuesday it will keep its European Opel unit and restructure it instead of selling a 55 percent stake to Canadian auto parts maker Magna International and its partner, Russian lender Sberbank.

GM's board of directors made the decision at a daylong meeting after determining that a 3 billion euros ($4.43 billion) restructuring plan was significantly lower than what GM would have had to contribute to other bidders for the division. GM CEO Fritz Henderson added that Europe's business environment and GM's overall health have both improved since it put the division up for sale.

The decision ends a year of uncertainty for the troubled Opel brand and its English sister, Vauxhall. Henderson said in a statement that GM will present its restructuring plan to the German government soon.

Ulrich Wilhelm, spokesman for Chancellor Angela Merkel said the German government "regrets the decision" by GM's board.

"With this decision, an investor process has been broken off which was conducted intensively by all those involved, including GM, over a period of more than six months," Wilhelm said in a statement. Germany now expects GM to strengthen Opel and to pay back the euro1.5 billion in bridge credit granted early this year, he added.

In a brief statement, Magna co-CEO Siegfried Wolf said his company would continue to support Opel and GM in the future.

"We understand that the board concluded that it was in GM's best interests to retain Opel, which plays an important role within GM's global organization," he said.

A spokeswoman for the Obama administration said the government was not involved in GM's decision to keep Opel.

The move came even though Opel's unions on Tuesday reached agreement with Magna for 265 million euros ($390 million) a year in cost cuts. Henderson said it will work with Europe's unions "to develop a plan for meaningful contributions to Opel's restructuring."

GM, which has lost more than $80 billion in the last four years and has received about $50 billion in aid from the U.S. government, had announced plans to sell Opel in order to focus on more profitable regions, including Latin America and Asia.

But the potential sale had been fraught with complications. In August, GM rejected a deal to sell Opel to Magna because it preferred Brussels-based investor RHJ International SA.

The offer from RHJ International required less government aid but appeared likely to involve more job cuts in Germany, something the German government had been keen to avoid as it headed into elections in September.

After Germany agreed to provide some euro4.5 billion ($6.6 billion) in financial aid for the Magna deal in September, GM announced it would sell Opel to the Magna consortium. But the deal was still set to face European Union scrutiny.

Last month, the EU set a deadline for Nov. 27 to decide whether the Magna and Sberbank takeover could cause competition problems. The EU also was considering examining German government subsidies to Opel. Germany hadn't formally asked for EU approval to give the euro4.5 billion to Opel's new buyers. Continued...