GM Agrees to Sell Opel and Vauxhall Brands to PSA Group

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A deal for General Motors sell its Adam Opel AG European business to French auto maker Peugeot is expected to be announced Monday, according to two people familiar with the plan.

PSA Chief Executive Carlos Tavares said last week a full acquisition of Opel offered an "opportunity to create a European auto champion" and quickly exceed 5 million annual vehicle sales.

Difficulties soon emerged, however, over the future of a near-$10 billion Opel pensions deficit and demands by GM that the brand be barred from competing overseas under PSA ownership against its own Chevrolet lineup.

The French PSA Group, parent company of Peugeot/Citroen, has been negotiating with GM to purchase the loss-making European auto brand for several weeks.

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Sales volume is critical in Europe's largely saturated mass-market segment, and adding GM's roughly 1.2 million in annual deliveries in the region would help PSA spread the cost of developing new cars and engines across a larger number of vehicles.

PSA Group has already met with Opel representatives, framing the takeover as a potential "rebound of the company and its iconic brands". Furthermore, French sources have claimed that the acquisition of Opel can offer the group savings of up to €2 billion (around $2.1 billion).

PSA is optimistic that acquiring Opel will save the company about $2.1 billion. "We are making progress every day", said another Paris-based source.

Citing an unnamed source, Reuters says board members for PSA approved the deal today. GM, on the other hand, is happy to see Opel go after losing the company money for the last 16 consecutive years.