Peugeot maker PSA has reached a deal to buy Opel and Vauxhall

Lucy Hill
March 6, 2017

Though the companies haven't reached an agreement as of yet, Detroit Free Press quoted PSA Group spokesman Pierre-Olivier Salmon as stating, "The discussions are going very well; I think everyone wants to reach an agreement".

French automobile group PSA will be buying the Opel and Vauxhall brands of GM as part of the acquisition.

The two brands that are now owned by General Motors shared numerous parts and technologies while the bowtie was sold in Europe, which led to the necessity of the non-compete restriction that may be applied to other markets where Chevy and Opel are present.

But the "non-compete" issues were finally resolved as GM agreed to inject "substantially more" into the pensions than the $1 billion to $2 billion it had initially offered, another person said.

The acquisition offered an "opportunity to create a European auto champion" and quickly exceed 5 million annual vehicle sales, Tavares told analysts as he presented full-year earnings. He further stated that as a result of the deal, the PSA annual vehicle sales would also go up to $5 million.

For PSA, the deal caps a stellar two-year recovery under chief executive Carlos Tavares, who is expected to slash costs at Opel in a bid to generate savings of up to 2bn euros a year.

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Growing Pension Deficits To Come To An End?

Opel employs 34,500 people in Europe, with more than 16,500 in Germany and 4,500 in Britain.

"There was also recognition that members of the Vauxhall pension fund will be no worse off". Both the plants of Vauxhall in the United Kingdom, together account for a pension deficit of £1 billion (approximately $1.23 billion), which at the end of 2014 was £840 million (approximately $1035 million).

Analysts, however, say a combination between PSA Groupe and Opel only makes sense if there are job cuts.

According to a former United Kingdom business secretary, PSA should pad up to face heavy lobbying from the German government, who will attempt to protect the 35,000 Opel workforce and its plants.

Tavares has given assurances to both Clark and the Unite union that he is "not here to shut plants" and that he will honour existing production commitments.

Other reports by TheDailyFarc

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