Following on from reports on Thursday that said France’s PSA Group was closing in on acquiring Opel from General Motors, two people with knowledge of the plan told Reuters that the board of PSA “approved the deal on Friday, with an announcement planned for Monday”.
Both GM and PSA, which owns the Peugeot and Citroen brands, declined to comment.
The two companies finalized the deal after several months of discussions and negotiations, apparently overcoming differences on around $10 billion in pension liabilities at GM’s European arm that includes Opel and Vauxhall, and which has been losing money for 16 years straight. The last time it recorded any profit was in 1999, having amassed more than $20 billion in losses since.
Another sticking point was GM’s demands that “a PSA-owned Opel be barred from competing against its own Chevrolet lineup in China and other overseas markets”, according to the Reuters source, who said it was resolved after the American company bundled the issue together with the pension liabilities offering PSA more than the initial proposal of $1 billion to $2 billion to fund the pension plans.
Regardless of the details, PSA will have its work cut out with Opel that not only has many products competing with its own brands, but also comes with low profit margins making cars in countries with high labor costs, including Germany, the UK and Spain, as well as a surplus of production.
Nevertheless, in a statement last week, PSA boss Carlos Tavares said he believes the tie up will offer “opportunity to create a European car champion” with annual sales of over 5 million units. Furthermore, French sources have claimed that the acquisition of Opel can offer the group savings of up to €2 billion (around $2.1 billion).