PSA Group to Acquire Opel from GM in $2.3 Billion Deal

Automotive - Pavan Pandey - Mar 06,2017

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psa group to acquire opel from gm in 23 billion dollars deal

French automobile manufacturer, PSA Group, has agreed to purchase General Motors’ European Unit, Opel AG and Vauxhall in a deal valued at $2.3billion (€2.2 billion).

The newly proposed deal comprises the Opel’s operations and its United Kingdom nameplate Vauxhall operations along with the brands, six assembly factories and five component manufacturing departments.

Mr. Carlos Tavares, the chief executive officer of PSA Group, said in a statement "We're confident that the Opel-Vauxhall turnaround will significantly accelerate with our support."

In a combined statement the General Motors and PSA Group quoted that the arrangement is anticipated to produce the annual saving of €1.7 billion by the year 2026, with the loss-making Opel unit creating an operating revenue margin of 2% by 2020 and 6% by 2026.

After the acquisition of Opel AG, the PSA Group leapfrogs its home-based competitor Renault Group to become the second-ranked automobile group by sales in the Europe. 
In 2016, the PSA Group and General Motors Europe recorded €72 billion in profit and 4.3 million automobile deliveries between two automobile companies.

Under this deal, General Motors will receive €1.32 billion for the Opel manufacturing business, €670 million in PSA share warrants and €650 million in cash.

General Motors stated that selling Opel and Vauxhall will boost company’s overall core business and help it to position resource to business with higher revenues such as advanced technologies.

The automobile companies stated that the General Motors will retain most Opel and Vauxhall pension expect for a German actives plan and some smaller plans that will be shifted to PSA Group. 

According to a source with knowledge of the matter, Mr. Tavares further added that the PSA Group would improve the Opel lineup with company’s own technologies to accomplish rapid savings.

The deal is estimated to close by the end of the year, and the regulatory authorizations for the deal are still pending.