General Motors To Rise On Opel Sale
Trade12 | Mar 07, 2017 09:56AM ET
On Monday, the U.S.’s largest automobile maker has announced that they would be selling their European business and subsidiary, which is Opel, a German automobile manufacturer.
PSA To Acquire Opel
Opel has been under General Motors Co. (NYSE:GM). for the past twenty years has failed to make considerable profits and will now be sold to Peugeot SA (PA:PEUP), a French car manufacturer along with international banking firm BNB Paribas SA for €900 million for the financial operations while PSA is set to pay €1.3 million for General Motor’s Opel brand.
Along with the acquisition deal, GM is set to buy 4.2% of Peugeot’s capital in five years following the official date of effectivity which means that GM would not be automatically a shareholder at PSA.
Opel, which currently sells around 1 million vehicles in Europe per year, will deduct around 10% of General Motor’s global volume but will boost its margin instantly as the company has incurred about $1 billion since 1999 where Opel has failed to make a profit.
Details of the transaction are set to be shown at a press conference with General Motors, following reports of the deal between the two car manufacturers.
The Opel acquisition is set to give the French company a head start from rival Renault (PA:RENA) and will rank them as the second top car maker next to Volkswagen (DE:VOWG_p) in Europe based on market shares.
General Motors, which reported more than 4 million delivery vehicles last year, currently holds around 71.6 billion euros in revenue along with PSA. Sources close to the matter stated that the partnership was approved as early as last Friday by the French Government and the supervisory board of PSA.
GM To Lay Off More Than 1000
Along with the sale of Opel to PSA, General Motors also announced on Monday that it will lay off more than 1000 employees this coming May from its Lansing Delta Township assembly plant located in Michigan as it transfers vehicle production to Tennessee.
Despite the layoff of exactly 1,100 workers, General Motors has been able to add 800 jobs last year at their Tennessee plant in Spring Hill set to manufacture and build the new GMC Acadia SUV version. Meanwhile, the Lansing Delta plant is currently building the Buick Enclave unit and Chevrolet Traverse according to Tom Wickham a General Motors spokesman.
General Motors also has current plans to invest $1 billion in the manufacturing of the U.S. factories as part of their pledge to US President Donald Trump to create more cars in the country and drive more investors in the country.
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