PSA pays GM $2.3 billion for Opel, sets first recovery goals

PSA Group (PEUP.PA) has agreed to buy Opel from General Motors (GM.N) in a deal valuing the business at 2.2 billion euros ($2.3 billion), creating a new regional car giant to challenge market leader Volkswagen (VOWG_p.DE).

The maker of Peugeot and Citroen cars vowed to return Opel and its British Vauxhall brand to profit, with an operating margin of 2 percent within three years and 6 percent by 2026 underpinned by with 1.7 billion euros in joint cost savings.

“We’re confident that the Opel-Vauxhall turnaround will significantly accelerate with our support,” PSA Chief Executive Carlos Tavares said in a statement issued by the two carmakers on Monday.

By acquiring Opel, the French group leapfrogs rival Renault (RENA.PA) to become Europe’s second-ranked carmaker by sales, with a 16 percent market share to VW’s 24 percent. Last year, PSA and GM Europe recorded 72 billion euros in revenue and 4.3 million vehicle deliveries between them.

GM will receive 1.32 billion euros for the Opel manufacturing business – 650 million euros in cash and 670 million in PSA share warrants. Read More: http://www.reuters.com/article/us-opel-m-a-psa-idUSKBN16D0J1