GM, PSA Finalize Deal for Opel/Vauxhall Brands
General Motors confirmed on Monday the terms of an agreement that will see the Opel and Vauxhall brands, as well as GM Financial’s European operations, sold to the PSA Group for the respective totals of €1.3 billion ($1.37 billion USD) and €0.9 billion ($951 million USD). Reuters reported that GM and PSA Group reached an agreement in principle on Friday.
In its acquisition of Opel and Vauxhall, PSA Group ascends to the position of Europe’s second-largest automaker with a total market share of 17%. PSA Group’s purchase of GM Financial’s European ops is a 50/50 venture with BNP Paribas at the rate of 0.8 times pro forma book value at the close of the transaction, putting PSA Group’s total payment at €1.8 billion ($1.9 billion USD).
“We are proud to join forces with Opel/Vauxhall and are deeply committed to continuing to develop this great company and accelerating its turnaround,” said Carlos Tavares, chairman of the Managing Board of PSA. “We respect all that Opel/Vauxhall’s talented people have achieved as well as the company’s fine brands and strong heritage.
“We intend to manage PSA and Opel/Vauxhall capitalizing on their respective brand identities,” added Tavares. “Having already created together winning products for the European market, we know that Opel/Vauxhall is the right partner. We see this as a natural extension of our relationship and are eager to take it to the next level.”
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The deal includes all of the Opel and Vauxhall brands’ operations, including six assembly facilities, five component-manufacturing facilities, the Rüsselsheim engineering center, and an estimated 40,000 employees. It is also indicated that Opel and Vauxhall will retain their respective executives, including Opel CEO Dr. Karl-Thomas Neumann.
“It is our intention to make sure Mr. Neumann continues the excellent work he has been doing. We trust that he will be in the best position to lead the turnaround and a profitable future for Opel,” Tavares said.
GM and PSA intend to continue collaboration on electrification technologies and existing supply agreements for Holden and certain Buick models. PSA may also source fuel cell systems from the GM/Honda joint venture.
“We are very pleased that together, GM, our valued colleagues at Opel/Vauxhall and PSA have created a new opportunity to enhance the long-term performance of our respective companies by building on the success of our prior alliance,” said Mary Barra, GM chairman and chief executive officer. “For GM, this represents another major step in the ongoing work that is driving our improved performance and accelerating our momentum. We are reshaping our company and delivering consistent, record results for our owners through disciplined capital allocation to our higher-return investments in our core automotive business and in new technologies that are enabling us to lead the future of personal mobility.”
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General Motors will retain one of its European facilities—the engineering center in Torino, Italy—and Opel/Vauxhall will continue to use GM IP “until its vehicles progressively convert to PSA platforms over the coming years.” GM will also continue to pay all European and UK pension plans with the exception of the German Actives Plan. Automotive News notes that this could put GM on the hook for as much as $10 billion in pension payments.
PSA intends for Opel/Vauxhall to achieve a 2% recurring operating margin and positive operational free cash flow by 2020.
News Source: Automotive News (subscription required)