PSA Agrees To Buy Opel From GM
As rumored last month, France’s PSA Group has now agreed to acquire GM’s Opel division, in a deal that puts the value of the business at €2.2 billion ($2.3 billion).
The French auto manufacturer — which currently sells Peugeot- and Citroen-branded models — has stated publicly that it intends to return Opel (and the UK’s Vauxhall brand as well) to profitability within a few years. The target is apparently to achieve an operating margin of 2% within 3 years and 6% by 2026 — roughly €1.7 billion in joint cost savings will reportedly play a part in this. (As a reminder here, Opel has now experienced 16 full-year losses in a row.)
PSA Group CEO Carlos Tavares commented on the deal: “We’re confident that the Opel-Vauxhall turnaround will significantly accelerate with our support.”
Notably, the sale of Opel will mark GM’s complete exit from the European market — which is particularly interesting since GM has been involved there since all the way back in the 1920s.
When the acquisition is complete, PSA Group will become Europe’s second-largest auto manufacturer by sales numbers (~16% market share), behind only VW Group (24% market share) and surpassing rival French firm Renault.
Reuters provides more:
“Last year, PSA and GM Europe recorded a combined €72 billion in revenue and 4.3 million vehicle deliveries.
“GM will receive €1.32 billion for the Opel manufacturing business in the form of €650 million in cash and €670 million in PSA share warrants.
“An additional €900 million will be paid by the Paris-based carmaker and BNP Paribas for Opel’s financing arm, to be operated jointly and consolidated by the French bank. …
“Tavares said on Monday the targeted savings would come from purchasing and research and development — avoiding plant closures — as the Opel lineup is redeveloped with PSA technology and vehicle architectures.”
This will “begin” with the Opel Corsa, which will now be delayed until 2020 because of a redesign. This release will be followed by the release of another 5 new PSA-based Opel models by 2023.
Interestingly, the deal will see GM retain the majority of Opel’s pensions deficit, which is estimated to be around $10 billion.
The Reuters coverage continues:
“Existing Opel models will be barred from entering new overseas markets under ‘non-compete’ agreements that had also complicated negotiations — while GM will be similarly excluded from marketing the same underlying technologies in Europe.
“The PSA warrants, exercisable in five years and maturing in nine, provide a financial incentive for GM to continue cooperating. The US carmaker has agreed to sell the shares received upon exercise, keeping no stake in PSA.”
So, it looks like those interested in buying the Opel Ampera-e (the rebranded Chevy Bolt EV for the European market) have nothing to worry about. The deal seems to be a pretty straightforward one, so the model should be available in decent quantities.
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