PSA set to announce deal to buy General Motors’ Opel unit

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PSA is planning to announce an agreement to buy General Motors’ loss-making Opel division on Monday, in a move that will make the Peugeot and Citroen owner the second-largest carmaker in Europe.

The board of the French carmaker met on Friday to vote on the proposed deal, according to two people. The agreement will be publicly unveiled in Paris on Monday morning.

The timing, which could slip, allows both companies to publicly announce the deal on Monday before the Geneva Motor Show begins on Tuesday.

Labour unions in France, Germany and the UK were briefed on the arrangements on Friday, according to three sources.

Both companies refused to comment.

The deal will see GM retreat from Europe, where it has racked up losses since 1999, while giving PSA a third mainstream brand to push into new international markets.

Negotiations were running up to the wire. Questions over Opel’s pension deficit, licensing of electric car technology and clauses to prevent PSA competing with GM in certain markets all threatened to delay or derail the talks.

It remains unclear whether the question of what happens to Opel’s $7bn pension deficit has been resolved, or whether Monday’s agreement will contain a clause that makes the deal contingent on this being agreed.

Whether this passes, in part or in full, from General Motors to PSA was the largest point of contention during the talks, according to one person who was part of the negotiations.

Vauxhall, the UK arm of Opel, has a separate pension deficit of £1bn.

The use of electric car technology — developed by General Motors for the Chevrolet Bolt in the US but rolled out to the Opel Ampera-E in Europe — was also a point of contention.

Peugeot’s technology for fully electric cars is not due to reach the market until 2019, when Mr Tavares has promised will lead to a welter of battery vehicles on sale.

PSA chief executive Carlos Tavares has said in time he plans to export Opels – which are currently only sold in Europe – around the world to compete in markets where appetite for French brands Peugeot and Citroen is not strong.

The company has vowed to return to the US market.

Whether it agrees not to use Opel to compete with General Motors in key markets was another sticking point in the discussions.

“You don’t want PSA-branded Opels competing with Chevrolet in Brazil or the US,” said one person who advised on the deal.

The sale, which will only take place after a period of intensive due diligence, will put the future of Opel’s 38,000 workforce and its plants in the hands of put into the hands of PSA chief Carlos Tavares, a renowned cost-cutter.

He has pledged to honour existing labour deals that Opel holds.

Politicians from Germany, the UK and France have all met with PSA to seek assurances over jobs.

PSA announced two weeks ago it was in advanced talks to buy GM’s loss-making European division.

GM has racked up losses since 1999 in Europe, with efforts to turn around the division frustrated by currency shifts and high labour costs.

The company expected to make a small profit in 2016, but the fall in sterling after Brexit pushed the division back into a loss.

During the negotiations General Motors was particularly keen to wrap up talks before next week’s Geneva trade show, where it is showing off the new Insignia saloon car, according to two people with knowledge of the company’s thinking.

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