The board of General Motors decided to keep Opel, undoing months of negotiations to sell its European unit to a Russian-backed group led by Canadian auto supplier Magna.

GM confirmed the decision by its 13-member board after a meeting of directors Tuesday in Detroit. Improving business conditions and the strategic importance of Germany-based Opel to its overall operations prompted the decision, GM said.

"GM will soon present its restructuring plan to Germany and other governments and hopes for its favorable consideration," GM's CEO Fritz Henderson said in a statement. "We understand the complexity and length of this issue has been draining for all involved."

GM says restructuring Opel would cost about $4.4 billion.

The move could presage a fight with German autoworkers, whose union favored the Magna deal as the option least likely to close German plants and cut jobs.

"Selling Opel never made sense to me," said CEO Jeremy Anwyl of auto site Edmunds.com in reaction to the GM decision. "Europe is a major market; how can you be a global automaker without a significant presence there?"

Before it began trying to sell Opel, GM often referred to the German operation as its source of small-car expertise. "With the likelihood of increasing fuel prices, expertise in small cars has to be key for the car industry moving forward," Anwyl said. "GM can't abandon the experience it has picked up in Europe."

The meeting of the GM board came after European Union officials asked GM to confirm whether it would have decided to sell Opel to Magna if it had known that 4.5 billion euros ($6.6 billion) in state aid promised by Germany would go to any buyer.

Under pressure to focus on shoring up sales in its home market after emerging from bankruptcy, GM's board had earlier opted to sell a 55% stake in the Opel unit to Canadian group Magna and its partner Sberbank.

GM's move is a setback 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 groups.

Magna had no comment on the GM decision.

Opel's workforce — which was to be cut by a fifth under the new owners from 50,000 — was supposed to receive a 10% stake in the new company in return for 265 million euros ($390 million) in annual cost concessions. GM would have kept a 35% stake under the now-scrapped deal.