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Peugeot owner PSA explores acquisition of GM’s Opel division

15 February 2017
PSA Group, the maker of Peugeot and Citroen cars, is exploring an acquisition of General Motors Co.’s European business to cement a top position in Europe in a deal that could hasten consolidation of the region’s crowded automotive landscape.

GM and the French carmaker are in talks on numerous strategic initiatives, including the possible sale of Opel to PSA, the companies said after Bloomberg reported the talks earlier Tuesday, adding there was no assurance an agreement will be reached.

The US manufacturer is seeking a multi-billion dollar amount for Opel, which also operates UK sister brand Vauxhall, because of the outlook for the improved operations, according to a person familiar with the matter. Analysts at Macquarie estimated that Opel has an enterprise value of about $2.8 billion (around AED 10 billion).

“Opel is strategically a good fit for PSA, complementing its exposure to the European car market,” said Jose Asumendi, an analyst for JP Morgan. “The leap of faith in this transaction” would be the prospects for PSA to restructure Opel in Germany, “a situation which could be potentially more challenging” than its cost-cutting in France.

A combination would create a manufacturer with about 16 per cent of the European car market, pushing past Renault SA to become the region’s second-biggest auto group after Volkswagen AG. A deal would also be the second run at linking the two mass-market carmakers. GM, which has controlled Opel for nearly 90 years, sold a 7 per cent stake in its French counterpart in 2013 after savings from a purchasing and development cooperation fell short of expectations.

(Aaron Kirchfeld, Siddharth Philip, David Welch, Ed Hammond and Ruth David/Bloomberg)