PSA Group, the parent company of Peugeot, Citroen and DS Automobiles car brands has bought Opel and Vauxhall car brands from General Motors for a deal worth € 1.3 billion. The French multinational manufacturer also bought GM Financial's European operations for € 0.9 billion.
With the addition of Opel and Vauxhall brands, PSA Group will overtake Renault to become the second-largest automotive company in Europe, with a 17 percent market share, behind Volkswagen.
PSA's buyout includes all of Opel and Vauxhall's automotive operations, comprising Opel and Vauxhall brands, six assembly and five component-manufacturing facilities, one engineering center at Russelsheim and approximately 40,000 employees. GM will retain the engineering center in Torino, Italy. Opel and Vauxhall will also continue to benefit from intellectual property licenses from GM until its vehicles progressively convert to PSA platforms over the coming years. The transaction is subject to regulatory approvals and reorganisations, and is expected to close before the end of 2017.
"We are proud to join forces with Opel/Vauxhall and are deeply committed to continuing to develop this great company and accelerating its turnaround," said Carlos Tavares, chairman of the Managing Board of PSA.
"We are very pleased that together, GM, our valued colleagues at Opel/Vauxhall and PSA have created a new opportunity to enhance the long-term performance of our respective companies by building on the success of our prior alliance", said Mary T. Barra, GM chairman and chief executive officer.
PSA, together with BNP Paribas, will also acquire all of GM Financial's European operations through a newly formed 50/50 joint venture. This joint venture will be fully consolidated by BNP Paribas and accounted under the equity method by PSA.
The GM has reported a loss of $257m from its European operations last year. It is the sixteenth consecutive loss-making year for GM in Europe. Hence it is logical to do away with the loss-making brands.