GM to sell two European lines to PSA Group for $2.3B
The U.S. automaker is signing off on Opel and Vauxhall, which hasn’t made the company profits in years. Officials call it a ‘major step in the ongoing work’ toward ‘accelerating its turnaround.’
On Monday, the company that manufactures brands including Peugeot and Citroen announced that it would buy General Motors’ Opel and Vauxhall lines. The roughly $2.3 billion deal reportedly would close by year-end.
Peugeot SA will pay EUR1.3 billion for GM’s Opel and Vauxhall brands, the companies said Monday. GM’s financial operations in Europe will be jointly acquired by Peugeot and BNP Paribas SA for about EUR900 million.
As part of the deal, GM will also get warrants to buy 4.2% of Peugeot’s capital. GM won’t get voting rights with these shares and has agreed to sell any Peugeot stock it receives within 35 days of receipt. These options can be exercised starting five years after the issue date, so GM won’t immediately become a shareholder in the French company.
Though the move would make PSA Group the second-largest automobile maker in Europe, the organization is taking a risk by buying two European brands that GM hasn’t been able to make profitable for years. For GM, the deal marks the U.S. automaker’s decision to cut its losses.
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