GM Makes It Official: PSA Lands Opel in $2.3 Billion Deal, America Keeps Its Buick Supply (for Now)

As expected, General Motors started off the work week by officially announcing the selloff of its European division to France’s PSA Group.

The Opel and Vauxhall brands, which have stubbornly resisted all attempts to return to profitability, are no longer GM’s problem. It’s a complex deal, but on the product side, Americans can still expect a generation of Buick Regals based on the Opel Insignia.

By severing a 90-year corporate tie and offloading Opel/Vauxhall to PSA, GM has created a new second-biggest automaker in Europe. The French automaker will now control 17 percent of the market, topped only by Volkswagen Group.

GM will gain 2.2 billion euros ($2.33 billion U.S.) through the purchase of its automotive subsidiaries and GM Financial’s European operations, with the latter group acquired through a 50/50 joint venture between PSA and French bank BNP Paribas. In a joint media release, the automakers claim the lending unit’s platform and staff will remain in place.

“We respect all that Opel/Vauxhall’s talented people have achieved as well as the company’s fine brands and strong heritage,” said PSA chairman Carlos Tavares in a statement. “We intend to manage PSA and Opel/Vauxhall capitalizing 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.”

It’s not all gravy for GM, however. For its side of the deal, GM must cover existing pension obligations for Opel employees — a responsibility worth about $3 billion. The automaker’s Turin, Italy engineering center remains in American hands.

Claiming that the deal positions Opel and Vauxhall for long-term success, GM CEO Mary Barra stated “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.”

For GM, the deal includes $689 million in PSA share warrants, which can be exercised after five years. (No voting rights or governance comes attached to those shares.) Now that it is unburdened from its money-losing European divisions, GM can also repurchase more of its own shares — accelerating part of its long-term financial plan.

Just because it’s Splitsville for GM and Opel doesn’t mean the two automakers won’t remain strategically linked. GM and PSA plan to collaborate on electrification projects designed to give both companies a competitive edge in the expanding EV market. As GM’s Buick brand relies heavily on Opel for product, “existing supply agreements for Holden and certain Buick models will continue,” the automakers announced.

As PSA platforms trickle into the Opel lineup over the coming years, expect to see the gradual erosion of Buick’s European links.

The deal also leaves open the possibility of PSA sourcing fuel cells from a GM-Honda joint venture sometime in the future.

[Image: Opel]