PSA Group to acquire Opel/Vauxhall from General Motors

6 March 2017

General Motors and PSA Group today announced an agreement under which GM’s Opel/Vauxhall subsidiary and GM Financial’s European operations will be acquired by the PSA Group in a transaction valued €2.2 billion.

Opel/Vauxhall automotive operations will be acquired by PSA for €1.3 billion. GM Financial’s European operations will be jointly acquired by PSA and BNP Paribas for 0.8 times their pro forma book value at the closing of the transaction, or approximately €0.9 billion.

With the addition of Opel/Vauxhall, which generated revenue of €17.7 billion in 2016, PSA will become the second-largest automotive company in Europe, after Volkswagen, with a 17% market share.

The transaction will allow substantial economies of scale and synergies in purchasing, manufacturing and R&D—said the companies. Annual synergies of €1.7 billion are expected by 2026, of which a significant part is expected to be delivered by 2020, accelerating Opel/Vauxhall’s turnaround. These estimated savings do not include any jobs cuts, said PSA’s chief executive, Carlos Tavares. Leveraging the partnership with GM, PSA expects Opel/Vauxhall to reach a recurring operating margin of 2% by 2020 and 6% by 2026, and to generate a positive operational free cash flow by 2020. Opel/Vauxhall has generated losses for General Motors since 1999.

Most of Opel/Vauxhall’s European and UK pension plans will remain with General Motors, with the exception of the German Actives Plan and some smaller plans, which will be transferred to PSA. GM will pay PSA €3.0 billion for full settlement of transferred pension obligations.

In connection with this transaction, GM or its affiliates will also receive warrants equivalent to a 4.2% non-voting stake in the PSA Group.

The transaction includes all of Opel/Vauxhall’s automotive operations, comprising Opel and Vauxhall brands, six assembly and five component-manufacturing facilities, one engineering center (Rüsselsheim) and approximately 40,000 employees. GM will retain the engineering center in Torino, Italy.

The transaction is subject to various closing conditions, including regulatory approvals and reorganizations, and is expected to close before the end of 2017.

Source: General Motors