PARIS French carmaker PSA Group (PEUP.PA) reached an agreement with General Motors (GM.N) to buy the US carmaker's loss-making Opel division and won the support of its own board for the deal on Friday, a source familiar with the matter told Reuters. The French automaker plans to make a formal announcement on Monday, the source said.
Nevertheless, in a statement last week, PSA boss Carlos Tavares said he believes the tie up will offer "opportunity to create a European vehicle champion" with annual sales of over 5 million units.
One of the key negotiating points is how PSA can achieve about 2 billion euros ($2.1 billion) in savings from a deal, said one of the people.
Equally important, a deal will have to be presented on the future of a near-$10-billion Opel pensions deficit and demands by GM that the brand be barred from competing overseas under PSA ownership against General Motors' own Chevrolet lineup.
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Stock for GM was trading at around $38.18 a share today following the report from Reuters, which accounted for an increase of 1%.
PSA Group has already met with Opel representatives, framing the takeover as a potential "rebound of the company and its iconic brands".
The carmakers have since narrowed the gap on pensions and the so-called "non-compete" agreements sought by GM, the people said, although it remains unclear how or whether they have been resolved. GM, on the other hand, is happy to see Opel go after losing the company money for the last 16 consecutive years.
Automotive News is reporting that the PSA Group board has just voted in favour of the deal that's been struck and a confirmation of the agreement would be made on Monday.