The French automaker PSA Group will buy Opel from its American competitor General Motors (NYSE: GM) for 2.2 billion euro ($ 2.3 billion), the company announced on Monday, resulting in the creation of a new European industry giant that will be able to challenge the market leader – Volkswagen.
The company behind Peugeot and Citroen cars has promised to return Opel and its British brand Vauxhall to profit, aiming to achieve operating margin at the level of 2% in three years and 6% by 2026 thanks to 1.7 billion euro of savings.
"We are confident that the financial recovery of Opel-Vauxhall will significantly accelerate with our support," - said the head of PSA, Carlos Tavares.
The acquisition of Opel will allow PSA to outstrip the French competitor Renault, becoming the second European automaker in terms of sales with a 16% market share, compared to 24% of VW.
The total revenue of PSA and the European division of GM last year was 72 billion euro, and the auto production reached 4.3 million units.
PSA shares rose 2.4% to 19.51 euro during this morning. GM papers closed Friday's trading with a rise of 1.2% after Reuters announced the agreement between the companies.
As the European car market is close to a peak, some analysts expect that the combined company will have to close two or three plants in the next five years. Uncertainty is exacerbated by the forthcoming withdrawal of Britain from the European Union.
However, Tavares said that the export may supply Opel factories with labor, and production in Britain in the case of "hard Brexit", in which the country will lose access to the single block market, carries not only risks, but also opportunities.
PSA CEO plans to revitalize the non-profitable brands of Opel and Vauxhall through restructuring operations similar to what he was doing to restore the business of Peugeot and Citroen. He also wants to save on costs after buying Opel.