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Peugeot close to sealing Opel deal, sources say

Industry news

Paris, France / Frankfurt, Germany – PSA Group and General Motors hope to announce PSA's acquisition of Opel within days after narrowing differences on pension liabilities at GM's European division and other issues.

Insiders said on Thursday talks were progressing well ahead of a PSA board meeting to be held before the tie-up can be unveiled, and that the deal could be announced as soon as Monday, the eve of the Geneva car show.

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But the talks weren't concluded, they cautioned, and there was still no guarantee a definitive deal could be reached, or that the PSA board would approve it. Nevertheless, one source close to PSA said: "Things are advancing as they should; there's a sense of confidence now."

Spokespeople for PSA and Opel declined to comment.

The two carmakers, which already share some technology and production in an existing European alliance, confirmed in February they were negotiating an outright acquisition of Opel by Paris-based PSA, sparking widespread concern over possible job cuts.

'Creating a champion'

The first models jointly developed under their five year-old partnership will be on display at the Geneva show, which will open to the media on Tuesday.

PSA chief executive Carlos Tavares said last week a full acquisition of Opel offered "an opportunity to create a European car champion" that could quickly exceed five million annual vehicle sales. Sources have said the French carmaker also expects savings of up to €2 billion (R27.7 billion) from the tie-up.

Difficulties soon emerged, however, over the future of a near-$10 billion (R130 billion) Opel pensions deficit and demands by GM that the brand be barred from competing overseas under PSA ownership against its own Chevrolet lineup.

GM boss Mary Barra publicly sounded a circumspect note when asked about an Opel sale on Tuesday.

"We've done a lot to improve the business, she said, "but we're exploring opportunities to see if we can accelerate that even more because scale does matter in this business."

Export potential 

Insiders said the carmakers had since narrowed the gap on pensions and the so-called "non-compete" agreements sought by GM, although it remained unclear how or whether they have been resolved.

In his public comments on 23 February Tavares said he saw export potential for the Opel brand under PSA ownership. However, much of the existing Opel lineup would remain dependent for years on technology and parts shared with other GM brands and Detroit has been pressing for a deal barring those legacy Opel models from markets including China, Russia and Latin America, sources have said.

Tavares reportedly told his board last seek PSA would rapidly redevelop the core Opel lineup with its own technologies to achieve swift cost savings.

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