GM Sells Opel/Vauxhall, Finance Units to Europe’s PSA Group for $2.3 Billion
On Monday, France’s PSA Group reached an agreement with General Motors (GM) to buy GM’s European Opel/Vauxhall and associated financial units for a combined $2.33 billion. The deal is expected to close by year-end, depending on regulatory approvals. Both automakers have been alliance partners since 2012.
The purchase, which includes German Opel and British Vauxhall brands (€1.3 billion value) plus GM Financial’s European unit (€0.9 billion) will mean that the PSA Group becomes the second-largest automaker in Europe after the Volkswagen Group, with a 17% market share, according to a statement. Opel/Vauxhall accounts for nearly 1 million annual unit sales in Europe. Included in the transaction will be a joint venture in auto financing with BNP Paribas to support development of Opel and Vauxhall brands.
The move for GM comes after a nearly 90-year history with the two brands that recently included an as-yet-unsuccessful strategy to return the European subsidiary to profitability. Plans are for GM to retain a tiny presence by continuing to sell a few sporty or premium models in Europe—Chevrolet Camaro, Corvette and several Cadillac models.
In comments on the sale, GM Chairman and CEO Mary Barra said GM is focusing on its core automotive business and new technologies related to the future of personal mobility. She added about a continuing alliance with the PSA Group, “We look forward to our participating in the future success and strong value creation potential of PSA through our economic and continued collaboration on current and exciting new projects.”
The sale includes: Opel/Vauxhall operations; six assembly and five component plants; an engineering center in Rüsselsheim, Germany; and some 40,000 employees. All current Opel/Vauxhall intellectual property and licenses continue until vehicles convert to PSA platforms in the future.
In a joint statement, PSA, the maker of Peugeot and Citroen vehicles, expects to see a positive operational cash flow by 2020. GM will take a primarily non-cash special charge of $4.0-4.5 billion that will include pension duties. Plans likely include using proceeds to repurchase GM’s own shares.