Peugeot Family Willing To Relinquish Control Of PSA To GM
Mired in the same overcapacity crisis as the rest of Europe’s auto makers, the founding family of PSA is reportedly willing to give up control of the company that owns Peugeot and Citroen in exchange for a fresh infusion of capital from GM, which currently owns 7 percent of PSA.
Terms of the deal are unclear, but PSA is sustaining heavy losses as European car sales have tanked. Unlike arch rival Renault, PSA has no low cost cars to help attract emerging market consumers and value-oriented buyers in Europe.
The Peugeot family still holds a 25 percent stake in the company and retains roughly 38 percent of the voting rights. But the family is reportedly comfortable with the idea of giving up control, according to a Reuters source
“GM faces the same overcapacity situation with Opel, and that’s why PSA is trying to convince them to merge the two,” said one of the people, who asked not to be identified because the talks are confidential. “The Peugeot family has now accepted that they’ll lose control, so this is no longer an issue.”
The news outlet reports that nothing concrete would happen until after September’s German elections. Any deal with Peugeot would undoubtedly result in major job losses and factory closures in France, Germany or another European country, which makes any tie-up extremely politically sensitive. But given the prospect of GM absorbing yet another ailing European brand, deep cuts will be an inevitable part of the consolidation of PSA.
PSA needs a mercy killing. GM itself is not out of the woods. GM is having its own problems with Opel.
It intrigues me that, time after time after time, people jump at the conclusion that the best way to cure 2 ailing companies is to merge them. Almost always, what you get is a larger ailing comany, riven by newly-created internecine strife and much more difficult to fix. In this case, it's even worse. PSA might become majority-owned by GM, but it would still be separate from GM Europe and Opel. There is no sound reason for GM to want to back 3 separate organizations with 3 separate management groups in the European market that don't compete in significantly different customer segments and aren't market leaders in the segments they do compete in.
Using this merger logic, now is time for the Lincoln Motor Carriage Chariot Foundry to purchase PSA!