Peugeot's Purchase of GM's Opel Business Expected to be Announced Monday -- 2nd Update
March 04 2017 - 5:24AM
Dow Jones News
By Mike Colias and Nick Kostov
A deal for General Motors Co. to sell its Adam Opel AG European
business to French car maker Peugeot is expected to be announced
Monday, according to two people familiar with the plan.
The companies finalized terms in recent days after several
months of discussions, one of the people said. A purchase price
couldn't be learned. Representatives for GM and Peugeot declined to
comment.
The companies are expected to announce the deal before European
markets open Monday and hold a press conference in Paris at 9:15
a.m. local time, according to a different person familiar with the
matter. Several European governments had expressed concerns over
implications for jobs related to the tie-up after the companies
disclosed their talks last month.
With the acquisition, Peugeot, officially known as Group PSA SA,
would boost its European market share more than 6 percentage points
to about 16%, passing French Rival Renault SA to occupy second
place behind Volkswagen AG's 24%.
Unloading Opel, a German brand that sold its first vehicle at
the end of the 19th Century, would knock GM's volume down by 10%
and signal that GM Chief Executive Mary Barra has shelved any plans
to re-enter the running for the crown of the world's largest car
maker.
While it loses volume with the sale, GM will get an immediate
boost to its profit margin. Opel has failed to turn a profit since
1999, losing on average about $1 billion a year since then.
Detroit rivals Ford Motor Co. and Fiat Chrysler Automobiles NV
returned to the black in Europe recently. But GM recently said it
didn't expect to make money in the region until 2018.
An expected return to profit last year was short-circuited by
the plunge in the pound following the Brexit vote in the U.K.,
where Opel sells about 250,000 vehicles a year under the Vauxhall
brand.
For Peugeot Chief Executive Carlos Tavares, acquiring Opel is a
daring move. At the helm of the French company over the past three
years, the executive had made a name for himself as a cost cutter
more intent on squeezing out savings from existing operations than
building volumes.
He has often touted that he cut Peugeot's break-even production
point to 1.6 million vehicles a year, 1 million less than the
company needed to sell to turn a profit a few years earlier.
Write to Mike Colias at Mike.Colias@wsj.com and Nick Kostov at
Nick.Kostov@wsj.com
(END) Dow Jones Newswires
March 04, 2017 05:09 ET (10:09 GMT)
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