PSA SEALS OPEL TAKEOVER FOR €2.2B

French car­maker vows to turn around for­mer GM unit in 3 years

New Straits Times - - Business World - PARIS/FRANK­FURT

PSA Group has agreed to buy Opel from Gen­eral Mo­tors (GM) in a deal valu­ing the busi­ness at €2.2 bil­lion (RM9.7 bil­lion), cre­at­ing a new re­gional car gi­ant to chal­lenge mar­ket leader Volk­swa­gen (VW).

The maker of Peu­geot and Cit­roen cars vowed to re­turn Opel and its Bri­tish Vaux­hall brand to profit, with an op­er­at­ing mar­gin of two per cent within three years and six per cent by 2026, un­der­pinned by €1.7 bil­lion in joint cost sav­ings.

“We’re confident that the Opel­Vaux­hall turn­around will sig­nif­i­cantly ac­cel­er­ate with our sup­port,” said PSA chief ex­ec­u­tive Car­los Tavares in a state­ment is­sued by the car­mak­ers yes­ter­day.

By ac­quir­ing Opel, the French group leapfrogs ri­val Re­nault to be­come Europe’s se­cond-ranked car­maker by sales, with a 16 per­cent mar­ket share to VW’s 24 per cent.

Last year, PSA and GM Europe recorded €72 bil­lion in rev­enue and 4.3 mil­lion ve­hi­cle de­liv­er­ies be­tween them.

GM will re­ceive €1.32 bil­lion for the Opel man­u­fac­tur­ing busi­ness — €650 mil­lion in cash and €670 mil­lion in PSA share war­rants.

The Paris-based car­maker and BNP Paribas will pay a fur­ther €900 mil­lion for the Opel fi­nanc­ing arm and op­er­ate it as a joint ven­ture, fully con­sol­i­dated by the French bank.

The sale of Opel seals GM’s exit from Europe. Eight years af­ter com­ing close to sell­ing Opel to Magna In­ter­na­tional, the Detroit auto gi­ant has faced in­vestor pres­sure to off­load the busi­ness and fo­cus on raising prof­itabil­ity rather than chase the global sales crown cur­rently held by VW.

Af­ter fend­ing off 2015 merger over­tures by Fiat Chrysler with sup­port from her board, GM boss Mary Barra agreed to tar­get a 20 per cent min­i­mum re­turn on in­vested cap­i­tal and pay out more cash to share­hold­ers.

The two car­mak­ers, which al­ready share some pro­duc­tion in an ex­ist­ing Euro­pean al­liance, con­firmed last month they were ne­go­ti­at­ing an out­right ac­qui­si­tion of Opel and its Bri­tish Vaux­hall brand by PSA, spark­ing con­cern over pos­si­ble job cuts.

The trans­ac­tion also sees GM re­tain­ing most of Opel’s pen­sions deficit, es­ti­mated at US$10 bil­lion (RM44.5 bil­lion).

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