dglobalnews.com Peugeot maker PSA has reached a deal to buy Opel and Vauxhall
Published: Sun, March 05, 2017
Markets | By Armando Jensen

Peugeot maker PSA has reached a deal to buy Opel and Vauxhall

PARIS/LONDON France's PSA Group (PEUP.PA) is set to announce a deal to buy Opel from General Motors (GM.N) on Monday after striking an agreement with the US carmaker and winning the blessing of its board for the acquisition.

Following the acquisition of Ambassador from Indian vehicle manufacturer Hindustan Motors, Peugeot is set to expand its range by entering a deal with General Motors for its Opel and Vauxhall brands, media reports said.

The French PSA Group, parent company of Peugeot/Citroen, has been negotiating with GM to purchase the loss-making European auto brand for several weeks. The PSA Group also produces both Citroen and Peugeot cars.

Additionally, Opel has scheduled a town hall meeting for workers at its headquarters on Monday morning, according to Reuters. That being said, two sources with knowledge about the deal have told Reuters job and plant cuts were discussed during the negotiations, with Vauxhall being the most vulnerable.

GM had expressed concerns about PSA using Opel to compete against its Chevrolet brand in China.

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2016 was Opel's 16th consecutive year of losses, so it will be interesting to see what will happen to the Rüsselsheim-based marque in the years to come under PSA's umbrella.

But the "non-compete" issues were finally resolved as GM agreed to inject "substantially more" into the pensions than the $1 billion to $2 billion it had initially offered, another person said. PSA averted bankruptcy by selling 14 percent stakes to France and Dongfeng in 2014, to match a diluted Peugeot family holding.

One of the key negotiating points is how PSA can achieve about 2 billion euros (S$2.972 billion) in savings from a deal, said one of the people. There was also the matter of potential job losses, but PSA has made the promise to "respect the existing agreements".

PSA Chief Executive Carlos Tavares said a full acquisition of Opel offered an "opportunity to create a European vehicle champion" and quickly exceed 5 million annual auto sales.

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