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It looks as if General Motors is about to sell its European division, ending almost of century of direct involvement with the auto industry there.
France’s PSA Group struck a deal with General Motors to buy the U.S. carmaker’s loss-making Opel division, two sources with knowledge of the matter said.
A sale price hasn’t yet been announced, although speculation has it the multiple billions.
The board of PSA, maker of Peugeot and Citroen cars, approved the deal on Friday with an announcement planned for Monday, one of the sources said.
Spokespeople for PSA and Opel declined to comment.
The two carmakers, which already share some production in an existing European alliance, confirmed last month they were negotiating an outright acquisition of Opel and its British Vauxhall brand by Paris-based PSA, sparking widespread concern over possible job cuts.
Earlier on Friday, Opel managers had adjourned a town hall meeting with workers until Monday morning, saying they could not yet discuss details of the planned acquisition.
PSA boss Carlos Tavares said last week a full acquisition of Opel offered an “opportunity to create a European car champion” and quickly exceed 5 million annual vehicle sales. The French carmaker also expects savings of up to 2 billion euros ($2.1 billion) from the tie-up, sources have said.
- Thomson Reuters
GM pursued a sales of Opel and its UK arm, Vauxhall, after the US carmaker’s bankruptcy in 2009. But the sale to Magna International and Russian bank fell apart when GM’s board reversed its initial enthusiasm.
Ever since then, Opel has been drag in GM’s performance, as European sales have been relatively flat. Sales in the highly profitable US market have boomed, and the carmaker has seen strong growth in China, a market that is already larger the the US.
If the Opel-PSA deal goes through, its will be the most dramatic example yet of GM CEO Mary Barra’s focus on maximizing the company’s return on capital.
“GM’s focus on streamlined, profitable operations has been clear ever since Mary Barra took the helm,” said Karl Brauer, executive publisher for Autotrader and Kelley Blue Book, in emailed comment.
“Selling Opel is another sign of GM’s interest in healthy financials over volume or market reach. The automaker’s European operations have been a money loser for years while other regions, such as China, are showing continued growth and profitability. This is a smart move for a company that sees far more potential in other global markets while also investing heavily in the autonomous future of personal transportation.”