PSA SEALS OPEL TAKEOVER FOR €2.2B
French carmaker vows to turn around former GM unit in 3 years
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).