The German government is set to name a preferred bidder for General Motors’ cash-strapped European operations, paving the way for one of the biggest state-supported industrial bail-outs in the country’s history.

Angela Merkel, German chancellor, will on Wednesday meet top officials from the US, General Motors and the bidders for GM’s European units Opel and Vauxhall. The three bidders in the running are Italian carmaker Fiat, Canadian car parts group Magna and Belgium-based financial investor RHJ International.