French automaker PSA Group is expected to announce tomorrow that it has purchased General Motors Co's (GM) money-losing European auto business, according to two people briefed on the matter.
Following the acquisition of Ambassador from Indian auto manufacturer Hindustan Motors, Peugeot is set to expand its range by entering a deal with General Motors for its Opel and Vauxhall brands, media reports said. The PSA Group also produces both Citroen and Peugeot cars.
Analysts, however, say a combination between PSA Groupe and Opel only makes sense if there are job cuts.
To build support for the deal, PSA executives have been touring Europe to meet with labour leaders and politicians and assure them that Opel's workers and production sites will be protected.
But in recent years the firm has booked repeated losses, costing Detroit-based GM around $15 billion (14 billion euros) since 2000.
Sources close to the talks had reported progress on Thursday after the carmakers narrowed differences on a near-$10 billion Opel pension deficit and other issues.
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GM had expressed concerns about PSA using Opel to compete against its Chevrolet brand in China.
PSA likely used a non-compete clause to help convince GM to pay more into the pension.
For PSA, the Opel deal caps a stellar two-year recovery under cost-cutting CEO Carlos Tavares, who said on February 23 he would apply the same methods to Opel if the deal went through.
Tavares also told his board that PSA would redevelop the Opel lineup with its own technologies to achieve rapid savings, according to people with knowledge of the matter. Furthermore, French sources have claimed that the acquisition of Opel can offer the group savings of up to €2 billion (around $2.1 billion).
The acquisition offered an "opportunity to create a European auto champion" and quickly exceed 5 million annual vehicle sales, Tavares told analysts as he presented full-year earnings.
That was the 16th consecutive loss-making year for GM in Europe, bringing its cumulated losses on the continent since 2000 to more than $15bn.