PSA Group has now confirmed that it will acquire Vauxhall/Opel from General Motors for €1.3 billion (£1.13bn).
With the addition of Vauxhall/Opel, which generated revenue of €17.7bn (£15.33bn) in 2016, PSA will become the second-largest automotive company in Europe – behind Volkswagen Group – with a 17% market share.
The deal will also see GM Financial’s European operation join the PSA Group for a further €0.9bn (£0.78bn).
Carlos Tavares, chairman of the managing board of PSA, said: “We are proud to join forces with Opel/Vauxhall and are deeply committed to continuing to develop this great company and accelerating its turnaround.
“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 capitalising 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.”
Tavares added: “We are confident that the Opel/Vauxhall turnaround will significantly accelerate with our support, while respecting the commitments made by GM to the Opel/Vauxhall employees.”
Mary T. Barra, GM chairman and chief executive officer, added: “We believe this new chapter puts Opel and Vauxhall in an even stronger position for the long term and we look forward to our participation in the future success and strong value-creation potential of PSA through our economic interest and continued collaboration on current and exciting new projects.”
A joint statement released by GM and PSA Group said the transaction will allow substantial economies of scale and synergies in purchasing, manufacturing and R&D.
Annual synergies of €1.7bn (£1.47bn) are expected by 2026 – of which a significant part is expected to be delivered by 2020, accelerating Opel/Vauxhall’s turnaround.
Leveraging the successful partnership with GM, PSA expects Opel/Vauxhall to reach a recurring operating margin of 2% by 2020 and 6% by 2026, and to generate a positive operational free cash flow by 2020.
PSA, together with BNP Paribas, will also acquire all of GM Financial’s European operations through a newly formed 50%/50% joint venture that will retain GM Financial’s current European platform and team.
This joint venture will be fully consolidated by BNP Paribas and accounted under the equity method by PSA.
The transaction is another step in GM’s ongoing work to transform the company, which has delivered three years of record performance and a strong 2017 outlook, and returned significant capital to shareholders.
GM and PSA also expect to collaborate in the further deployment of electrification technologies and existing supply agreements for Holden and certain Buick models will continue, and PSA may potentially source long-term supply of fuel cell systems from the GM/Honda joint venture.
The transaction includes all of Opel/Vauxhall’s automotive operations, comprising Opel and Vauxhall brands, six assembly and five component-manufacturing facilities, one engineering center (Rüsselsheim) and approximately 40,000 employees. GM will retain the engineering centre in Torino, Italy.