Geneva - PSA Group has agreed to buy Opel from General Motors (GM) in a deal valuing the business at e2.2 billion (R30.35 billion), the companies said on Monday, creating a new regional car giant to challenge market leader Volkswagen (VW).
The maker of Peugeot and Citroën cars vowed to return Opel and its British Vauxhall brand to profit, targeting an operating margin of 2 percent within three years and 6 percent by 2026 underpinned by e1.7 billion in joint cost savings.
PSA shares jumped 4 percent after chief executive Carlos Tavares said GM’s European arm could be turned around using some of the lessons from the French group’s own recovery.
By acquiring Opel, PSA leapfrogs French rival Renault to become Europe’s second-ranked carmaker by sales, with a 16 percent market share to VW’s 24 percent.
Last year, PSA and GM Europe recorded a combined e72 billion in revenue and 4.3 million vehicle deliveries.
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GM will receive e1.32 billion for the Opel manufacturing business - e650 million in cash and e670 million in PSA share warrants.
An additional e900 million will be paid by the Paris-based car maker and BNP Paribas for Opel’s financing arm, to be operated jointly and consolidated by the bank.
The sale of Opel seals GM’s exit from Europe.
Eight years after coming close to a sale to Canada’s Magna International, the Detroit auto giant has faced renewed investor pressure to offload the business and focus on raising profitability rather than chase the global sales crown held by VW.
After fending off 2015 merger overtures by Fiat Chrysler, with support from her board, GM boss Mary Barra agreed to target a 20percent minimum return on invested capital and pay out more cash to shareholders.
For PSA, the Opel deal caps a stellar two-year recovery under Tavares. It avoided bankruptcy in 2014 by selling 14 percent stakes to the French state and China’s Dongfeng, to match a diluted Peugeot family holding.