PSA Group (Peugeot Citroën) has reached a deal to buy General Motors’ (GM) Opel division, sources told Reuters on Friday, 3 March. The deal is set to be officially announced today, Monday 6 March.
Topics at the heart of discussions included GM’s pension plan for Opel and Vauxhall retirees, which analysts say is underfunded by about €8.5 billion. According to sources, PSA has told GM that it could not do a deal in which it shouldered most of the pensions deficit. According to another, GM sought to limit its pensions contribution to $1-2 billion (€950 million-€1.9 billion).
Another point of contention was the ‘non-compete’ agreements sought by GM, whereby GM does not want to allow legacy Opel cars to compete against it in its core markets of the US and China, in addition to Russia and Latin America. This conflicts with PSA’s desire to sell Opel cars globally.
A further key negotiating point was how PSA can achieve its desired circa €2 billion savings from the deal, said one of the sources. These are set to come from potential reductions in capacity (once current union agreements expire), as well as from joint purchasing, sharing more parts and lowering overhead costs. However, analysts have said the latter savings are not a silver bullet, and that capacity reductions, including job losses and plant closures, are key to making the merger successful.
However, Spanish Economy Minister Luis de Guindos said last Thursday on radio, after speaking to an unnamed senior PSA executive, that Spain’s car-making plants are ‘well-placed’ in the takeover talks. Opel and PSA have three factories between them in Spain, employing around 13,000 people.
De Guindos said: ‘For the Peugeot group, if this merger ends up happening, Spain is going to be very important […] and they are well aware of that,’ singling out Opel's factory in Zaragoza and Peugeot's in Vigo as key.
He added: ‘They also raise another question, that the Spanish factories ... are the most productive’ and ‘well-placed’ but did not reveal whether he had sought guarantees for jobs or labour agreements.
Spanish unions have said workers have raised concerns over the acquisition talks in recent weeks, with staff at PSA’s smaller Villaverde factory particularly concerned. The plant, in a southern district of Madrid, is running well below capacity.
Meanwhile, PSA Group chief executive officer Carlos Tavares plans a major overhaul of the company’s models over the next seven years, saying that by then 80% of its models will be available with either electric or rechargeable hybrid powertrain options. He says that this will allow for flexibility to meet potential changes in both demand and policy. PSA says the range of the pure electric versions will be 450km for B-segment models such as the Peugeot 208, 390km for C-segment SUVs such as the Peugeot 3008 and that plug-in hybrids will have an all-electric range of 60km.
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