PSA buys Opel/Vauxhall from GM in $2.3B Deal

John Colley, a professor at Warwick Business School said PSA has “little choice but to close the UK Vauxhall plants to make the Opel acquisition work”, as the cost of cutting jobs at the German plant would be far higher.

The transaction value for PSA, including Opel/Vauxhall and 50 percent of GM Financial’s European operations, will be 1.8 billion euros.

PSA Group will have a 17 percent market share.

“We are confident that the Opel/Vauxhall turnaround will significantly accelerate with our support”, PSA Chief Executive Officer Carlos Tavares said in the statement.

At this stage it’s uncertain in what guises the Vauxhall and Opel brands will continue, but from early comments made by PSA boss Carlos Tavares, it seems that the two companies will continue unchanged for now.

For GM, the agreement seems to suggest that Barra chose to focus on profits over market share. The automaker began to see a turnaround past year but fell behind again after Britain’s vote to leave the European Union caused the pound to steeply drop in value.

Half an hour after the Wall Street open, GM shares were around 1% lower at US$37.89.

BNP Paribas does not plan any other acquisitions in the sector for the time being and wants to finalize the deal in the fourth quarter, David added. However, GM will still be liable for most of Opel’s pension obligations.

Opel managers adjourned a town hall meeting with workers until Monday morning, saying they could not yet discuss details of the proposed deal, Reuters said. PSA might even source fuel-cell systems from GM and Honda’s joint venture, the company said. The French company went from net losses starting in 2012 to profit in 2015, and generated 2.7 billion euros in cash in 2016. Still, these shares won’t net GM voting rights, and GM agreed to sell any Peugeot stock it gets within 35 days of receipt.

“I personally have met with the highest levels of both General Motors and Peugeot, and the United Kingdom government, to make it abundantly clear that United Kingdom jobs, plants and communities will not be sacrificed for any sale”, McCluskey said.