General Motors (GM) and the PSA Group have announced that they have reached an agreement under which GM’s subsidiary Opel/Vauxhall and GM Financial’s European operations will be acquired by the French company in a transaction valuing these activities at €1.3 billion and €0.9 billion, respectively. With Opel/Vauxhall achieving €17.7 billion in sales in 2016, PSA (which has Peugeot and Citroen) will become the second largest automaker in Europe, with a market share of 17%.
“We are proud to join forces with Opel/Vauxhall and are committed to further developing this great company and accelerating its recovery,” said Carlos Tavares, Chairman of the PSA Executive Board. “We salute all that has been accomplished by its talented teams as well as the beautiful Opel and Vauxhall brands and the company’s outstanding legacy. We intend to manage PSA and Opel/Vauxhall by capitalizing on their respective brand identities. Having already developed together excellent models for the European market, we are convinced that Opel/Vauxhall is the right partner. This is a natural extension of our partnership, and we look forward to moving up the pace.”
The acquisition, which will be completed by the end of 2017, will enable PSA to achieve significant economies of scale and synergies in procurement, production and R&D. Synergies of 1.7 billion euros a year are expected by 2026 – a significant part of which is expected to materialize by 2020 – and should help speed up the recovery of Opel/Vauxhall.
PSA, along with BNP Paribas, will also acquire all of GM Financial’s European operations via a new joint venture, which is held equally, which will keep the current the GM Financial platform and European team accountable. From an accounting point of view, this joint venture will be fully consolidated by BNP Paribas and accounted for using the equity method by PSA.
This development marks a new milestone in GM’s ongoing efforts to transform the company, which has seen three years of record performance and solid outlook for 2017, while redistributing a significant share of capital to its shareholders.
GM’s core business will be strengthened, focusing on the continued development of the most profitable business opportunities, including advanced technologies that will revolutionize the future and create significant value for shareholders.
GM and PSA also plan to collaborate on the deployment of technologies related to electric cars. In addition, existing supply agreements for certain Holden and Buick models are maintained, while PSA could eventually purchase long-term fuel cell systems from the GM/Honda joint venture.