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PSA said to be close to deal to buy GM's European Opel unit
[FRANKFURT] PSA Group is closing in on a deal to acquire General Motors Co's Opel unit to create Europe's second-largest automaker, with an agreement possibly coming early next week, according to people familiar with the matter.
Both companies are planning to continue intense negotiations through the weekend with the aim of announcing a deal on Monday, said the people, who asked not to be identified as the plan isn't public. The complexity of talks could lead to a delay, the people said.
In a sign that talks have progressed, a meeting between PSA management and top European labour union officials has been tentatively scheduled for next week, one of the people said. PSA confirmed the potential union meeting but said it could be cancelled or postponed, adding that discussions were ongoing and that the carmakers haven't set a timeline. A spokesman for GM's European unit declined to comment.
One of the key negotiating points is how PSA can achieve about 2 billion euros (S$2.972 billion) in savings from a deal, said one of the people. These would come largely from potential future capacity reductions as well as savings from joint purchasing, sharing more parts and lowering overhead costs, the person said.
PSA chief executive officer Carlos Tavares plans to revive GM's unprofitable Opel and Vauxhall brands with a restructuring similar to his project that brought the maker of Peugeot and Citroen cars back from the brink over the past three years.
Opel, based near Frankfurt, could in turn serve as a growth driver with potential for expansion beyond its home region, a role that was limited under GM's ownership, Mr Tavares said last week.
GM shares rose 0.9 percent in New York on Thursday.
Sales volume is critical in Europe's largely saturated mass-market segment, and adding GM's roughly 1.2 million in annual deliveries in the region would help PSA spread the cost of developing new cars and engines across a larger number of vehicles.
Another issue in the talks is how GM and PSA will manage the pension plan for Opel retirees, people familiar with the discussions have said. The program is underfunded by about US$9 billion, according to data compiled by Bloomberg. Other complex questions to resolve include licensing fees for technology used in Opel cars and plans to cut production capacity.
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. France and Germany have emphasised the importance of preserving jobs and plants in both countries, and called on PSA to translate future growth into long-term employment security.