Just three weeks after General Motors confirmed it was in discussions with PSA Group to sell its European brands, the two companies have agreed on the terms of the deal.
In a joint statement, they announced PSA Group will acquire GM’s Opel-Vauxhall subsidiary as well as GM Financial’s European arm. The two deals are valued at $1.38 billion and $950 million, respectively.
By adding the Opel and Vauxhall brands to its arsenal, PSA reportedly will become the second-largest European automaker, with 17 percent market share.
“We are proud to join forces with Opel-Vauxhall and are deeply committed to continuing to develop this great company and accelerating its turnaround,” Carlos Tavares, PSA’s chairman of the managing board, said in a statement. “We respect all that Opel-Vauxhall’s talented people have achieved as well as the company’s fine brands and strong heritage. We intend to manage PSA and Opel-Vauxhall capitalizing on their respective brand identities. Having already created together winning products for the European market, we know that Opel-Vauxhall is the right partner. We see this as a natural extension of our relationship and are eager to take it to the next level.”
The transaction also is seen as a step in the right direction for GM, which now is focusing on increasing the profitability of its core brands.
“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,” GM CEO Mary Barra said in a press release.
PSA said the synergies will generate $1.8 billion in returns, much of which it expects before 2020. It will acquire GM Financial’s European division through a new 50-50 joint venture with BNP Paribas.
GM also will receive warrants to purchase PSA shares that have a nine-year maturity and can be exercised beginning five years after they’re issued. Opel and Vauxhall will continue to unitilize GM’s intellectual property licenses as thier cars transition to PSA platforms over the coming years.
Thumbnail photo via Opel