GM General Motors Company

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.

It is unclear if directors at both companies have signed off on the deal, and an announcement could still be delayed. Several European governments have weighed in on implications for jobs related to the tie-up, and last-minute objections in Paris, Berlin or London could also delay a final agreement.

With the acquisition, Peugeot, officially known as Group PSA SA, would boost its European market share more than 6 percentage points to about 16% and pass French Rival Renault SA -- climbing into second place behind Volkswagen AG's 24%.

Unloading Opel, an iconic 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 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 and has lost on average about $1 billion a year since then. Detroit rivals Ford Motor Co. and Fiat Chrysler Automobiles NV have returned to the black in Europe recently. But GM recently said it won't turn a profit in the region until 2018.

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, torpedoed what had been an expected return to profit last year.

For Peugeot Chief Executive Carlos Tavares, the acquisition is a daring move. At the helm of the French company over the past three years, the executive has 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 03, 2017 14:04 ET (19:04 GMT)

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