Une occasion

6 March 2017 By Olaf Storbeck

At a price of 1.8 bln euros, the French carmaker should get a good return from GM’s European business. The U.S. auto group lacked sufficient size to run Opel and Vauxhall efficiently. By taking PSA warrants, GM also gets insurance against appearing to have sold too cheaply.

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PSA Group will buy General Motors’ European brands Opel and Vauxhall for 1.3 billion euros. The French maker of Peugeot and Citroen cars will also pay 460 million euros for a 50 percent stake in its U.S. rival’s European financial services activities, with French lender BNP Paribas acquiring the other half of that business.

PSA Chief Executive Carlos Tavares wants to lift Opel and Vauxhall’s operating profit margin to 2 percent by 2020 and to 6 percent by 2026. After the integration of the two brands into PSA, which is expected to take almost a decade, Tavares is forecasting annual cost synergies of 1.7 billion euros, he said on March 6.

GM will receive a mixture of cash and warrants convertible into a 4.2 percent stake in PSA that can be exercised after five years.

The pension obligations of GM’s German operations will be transferred to PSA, along with a 3 billion euro payment to cover their full settlement. GM’s remaining unfunded pension obligations of $6.5 billion will remain with the U.S. company.

Shares in Peugeot were up 2.4 percent to 19.5 euros by 1000 GMT on March 6.

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