sabato, Luglio 24, 2021
HomeEconomyPeugeot Reaches Deal to Buy European Brands From General Motors

Peugeot Reaches Deal to Buy European Brands From General Motors

The owner of Peugeot and Citroën is close to completing a deal with General Motors to buy its European car brands Vauxhall and Opel.

Groupe PSA and GM could announce a deal as early as Monday morning after successful talks between the carmakers.

Negotiations about a potential acquisition were revealed last month and the board of PSA is now understood to have approved the deal.

The announcement of a deal will kickstart an brutal political battle between the governments of France, the home of PSA, Germany, the home of Opel, and Britain, the home of Vauxhall, to protect jobs and plants in their countries.

Carlos Tavares, the boss of PSA, has said the acquisition offered an “opportunity to create a European car champion”.

The enlarged company could sell more than 5m vehicles a year but PSA is understood to be aiming to cut as much as €2bn (£1.7bn) in annual costs by combining Peugeot and Citroën with Opel and Vauxhall.

The two carmakers, which sent an invitation for a joint press conference in Paris on Monday, have reached a framework agreement to complete the deal, according to people familiar with the matter, who asked not to be identified because negotiations are private. While final talks on remaining details of the transaction are ongoing, PSA’s board signed off on the transaction on Friday, the people said.

Spokesmen for PSA and Opel declined to comment.

One of the key negotiating points has been how PSA can achieve about 2 billion euros ($2.1 billion) in savings from a deal, said one person.

These would come largely from potential future capacity reductions as well as savings from joint purchasing, sharing more parts and lowering overhead costs, the person said.

PSA and GM are also discussing the French carmaker’s ability to sell Opel vehicles globally and the U.S. company’s right to bring Chevrolet-branded models to Europe down the line, two people said.

PSA Chief Executive Officer Carlos Tavares plans to revive GM’s unprofitable Opel and Vauxhall brands with a restructuring similar to his project that brought the maker of Peugeot and Citroen cars back from the brink over the past three years.

Opel, based near Frankfurt, could in turn serve as a growth driver with potential for expansion beyond its home region, a role that was limited under GM’s ownership, Tavares said last week.

Sales volume is critical in Europe’s largely saturated mass-market segment, and adding GM’s roughly 1.2 million in annual deliveries in the region would help PSA spread the cost of developing new cars and engines across a larger number of vehicles.

The deal between PSA and GM is likely to include a plan for Vauxhall and Opel’s growing pension deficit.

A worker on the production line of General Motors’ Vauxhall plant in Ellesmere Port in Cheshire.

Vauxhall employs 4,500 workers across its UK production sites – at Ellesmere Port in Cheshire and Luton – and has a pension deficit of as much as £1bn.

The scheme had a deficit of £840m at the end of 2014, according to regulatory filings, but analysts estimate that it could now be more than £1bn.

John Ralfe, a pensions expert, said PSA would be “rip-roaring bonkers” to take on the pension scheme.

 

The program is underfunded by about $9 billion, according to data compiled by Bloomberg.

Other complex questions to resolve include licensing fees for technology used in Opel cars and plans to cut production capacity.

To build support for the deal, PSA executives have been touring Europe to meet with labor leaders and politicians and assure them that Opel’s workers and production sites will be protected.

France and Germany have emphasized the importance of preserving jobs and plants in both countries, and called on PSA to translate future growth into long-term employment security.

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