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GM sale of Opel to PSA to be announced Monday

05 March 2017

Carlos Tavares, Renault's former COO turned Groupe PSA's CEO, has previously explained that purchasing Opel would give the French group the chance to become a "European auto champion", which could quickly exceed five million annual vehicle sales.

Another sticking point was GM's demands that "a PSA-owned Opel be barred from competing against its own Chevrolet lineup in China and other overseas markets", according to the Reuters source, who said it was resolved after the American company bundled the issue together with the pension liabilities offering PSA more than the initial proposal of $1 billion to $2 billion to fund the pension plans. Spokespeople for PSA and Opel declined to comment.

GM has not turned a full-year profit in Europe since 1999 and since then has lost billions battling high labor costs and an intensely competitive auto sales market.

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

The press conference will be on Monday at 0815 GMT, PSA and GM said, without specifying the subject.

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The deal "will be sealed on Monday morning in France and in Germany", the source said, adding that both sides "were very enthusiastic and satisfied".

The writing has been on the wall for some time for GM's Opel; GM's CEO Mary Barra told her staff in February that a PSA-Opel deal would be a good thing for both GM and PSA alike.

PSA likely used a non-compete clause to help convince GM to pay more into the pension.

The acquisition offered an "opportunity to create a European auto champion" and quickly exceed 5 million annual vehicle sales, Tavares told analysts as he presented full-year earnings. Furthermore, French sources have claimed that the acquisition of Opel can offer the group savings of up to €2 billion (around $2.1 billion).

2016 was Opel's 16th consecutive year of losses, so it will be interesting to see what will happen to the Rüsselsheim-based marque in the years to come under PSA's umbrella.