The purchase of Opel from General Motors "changes everything" for the PSA group. This was stated by the number one of the French group, Carlos Tavares, during a press conference underway in Paris together with his colleague from GM, Mary Barra. Together they formalized the operation.
The CEO of the American group admitted that parting with Opel after 88 years "was a difficult decision, but it's the right one", considering that GM's European branch has been in the red for 16 years.
These are the first reactions of the top management of the two companies at the press conference organized in Paris to explain the details of the operation. The switch of Opel and Vauxhall from Generl Motors to Peugeot is worth 1,3 billion euros and will create the second largest vehicle manufacturer in Europe.
In addition to the purchase of the two brands, which Psa plans to bring back to profit by 2020, Peugeot will acquire the financial branch of GM Europe, GM Financial, in a joint venture with BNP Paribas, for 900 million euros. The total value of the operation thus rises to 2,2 billion.
"The value of the transaction for PSA, including Opel/Vauxhall and 50% of GM Financial's European assets, will be 1,8 billion," the French group said. GM's European division is in chronic deficit and lost $257 million in 2016. PSA expects Opel and Vauxhall to return to profitability over the next three years, "with a recurring operating margin of 2% by 2020 and 6 % by 2026”.
Synergies worth 1,7 billion a year are expected by 2026. The deal will allow PSA to extend its scope of action by a third, with 1,2 million more vehicles sold a year by Opel (and Vauxhall in the UK United Kingdom) compared to the 3,15 million registered in 2016.
The transaction "includes all of the Opel/Vauxhall auto businesses, six assembly plants and five parts production plants, an engineering center (Russelsheim, Germany) and 40 employees," the statement said.
For its part, GM will keep the engineering center in Turin and will sign "subscription bonds for PSA shares for a total of 0,65 billion" with a 9-year maturity. PSA number one Carlos Tavares confirmed his goal of wanting to be "a European car champion", thanks to an operation that puts PSA in second place in the EU market with 17%, just behind Volkswagen (24%) .
Tavares will lead a group with 200 employees with 28 factories in the Old Continent where in 2016 a total of 4,4 million vehicles came, behind only the Wolfsburg group.
By mid-morning, Peugeot's stock gained just over 2% on the Paris Stock Exchange, after having managed to mark an increase of even more than 4%.
Fiat Chrysler also did well in Milan (+0,6%, in contrast to the -0,3% of the Ftse Mib): with the exit of General Motors from the European market, negotiations for a possible FCA merger could regain momentum -GM, sought in the past by Sergio Marchionne but hitherto always rejected by Barra.
