Sorry if it's a repost...
Sorry if it's a repost...
That's too bad. I love my Saturn-badged Astra. It has been a decent alternative to the usual array of compact hatches.
Just heard that while out grabbing lunch.
Here's GM's official release:
Establishes PSA Group as #2 in Europe. This strong and balanced presence in its home markets will serve as the basis of profitable growth worldwide Joint venture in auto financing with BNP Paribas to support development of Opel/Vauxhall brands €2.2 Bn transaction advances GM’s transformation and unlocks shareholder value through disciplined capital allocation Detroit and Paris – General Motors Co. (NYSE:GM) and PSA Group (Paris:UG) today announced an agreement under which GM’s Opel/Vauxhall subsidiary and GM Financial’s European operations will join the PSA Group in a transaction valuing these activities at €1.3 Bn and €0.9 Bn, respectively.
With the addition of Opel/Vauxhall, which generated revenue of €17.7 Bn in 20161, PSA will become the second-largest automotive company in Europe, with a 17% market share2.
Creates sound European foundation for PSA to support its worldwide profitable growth
“We are proud to join forces with Opel/Vauxhall and are deeply committed to continuing to develop this great company and accelerating its turnaround,” said Carlos Tavares, chairman of the Managing Board of PSA. “We respect all that Opel/Vauxhall’s talented people have achieved as well as the company’s fine brands and strong heritage. We intend to manage PSA and Opel/Vauxhall capitalizing on their respective brand identities. Having already created together winning products for the European market, we know that Opel/Vauxhall is the right partner. We see this as a natural extension of our relationship and are eager to take it to the next level.”
“We are confident that the Opel/Vauxhall turnaround will significantly accelerate with our support, while respecting the commitments made by GM to the Opel/Vauxhall employees,” continued Mr. Tavares.
Advances GM’s Transformation and Unlocks Value
“We are very pleased that together, GM, our valued colleagues at Opel/Vauxhall and PSA have created a new opportunity to enhance the long-term performance of our respective companies by building on the success of our prior alliance”, said Mary T. Barra, GM chairman and chief executive officer.
“For GM, this represents another major step in the ongoing work that is driving our improved performance and accelerating our momentum. We are reshaping our company and delivering consistent, record results for our owners through disciplined capital allocation to our higher-return investments in our core automotive business and in new technologies that are enabling us to lead the future of personal mobility.
“We believe this new chapter puts Opel and Vauxhall in an even stronger position for the long term and we look forward to our participation in the future success and strong value-creation potential of PSA through our economic interest and continued collaboration on current and exciting new projects,” Ms. Barra concluded.
Strengthens Each Company for the Long Term
The transaction will allow substantial economies of scale and synergies in purchasing, manufacturing and R&D. Annual synergies of €1.7 Bn are expected by 2026 – of which a significant part is expected to be delivered by 2020, accelerating Opel/Vauxhall’s turnaround. Leveraging the successful partnership with GM, PSA expects Opel/Vauxhall to reach a recurring operating margin3 of 2% by 2020 and 6% by 2026, and to generate a positive operational free cash flow4 by 2020.
PSA, together with BNP Paribas, will also acquire all of GM Financial’s European operations through a newly formed 50%/50% joint venture that will retain GM Financial’s current European platform and team. This joint venture will be fully consolidated by BNP Paribas and accounted under the equity method by PSA.
The transaction is another step in GM’s ongoing work to transform the company, which has delivered three years of record performance and a strong 2017 outlook, and returned significant capital to shareholders. It will strengthen GM’s core business, support its continued deployment of resources to higher-return opportunities including in advanced technologies driving the future, and unlock significant value for shareholders.
By immediately improving EBIT-adjusted, EBIT-adjusted margins and adjusted automotive free cash flow and de-risking the balance sheet, the transaction will enable GM to lower the cash balance requirement under its capital allocation framework by $2 Bn, which it intends to use to accelerate share repurchases, subject to market conditions.
GM will also participate in the future success of the combined entity through its ownership of warrants to purchase shares of PSA. GM and PSA also expect to collaborate in the further deployment of electrification technologies and existing supply agreements for Holden and certain Buick models will continue, and PSA may potentially source long-term supply of fuel cell systems from the GM/Honda joint venture.
Additional Information
Terms of the Agreement
Opel/Vauxhall automotive operations will be acquired by PSA for €1.3 Bn. GM Financial’s European operations will be jointly acquired by PSA and BNP Paribas for 0.8 times their pro forma book value at the closing of the transaction, or approximately €0.9 Bn.
The transaction has a total value of €2.2 Bn, for Opel/Vauxhall automotive operations and 100% of GM Financial’s European operations.
The transaction value for PSA, including Opel/Vauxhall and 50% of GM Financial’s European operations, will be €1.8 Bn.
In connection with this transaction, GM or its affiliates will subscribe warrants for €0.65 Bn. These warrants have a nine-year maturity and are exercisable at any time in whole or in part commencing 5 years after the issue date, with a strike price of €1. Based on a reference price of €17.34 for the PSA share5 , the warrants correspond to 39.7 MM shares of PSA, or 4.2% of its fully diluted share capital6. GM will not have governance or voting rights with respect to PSA and has agreed to sell the PSA shares received upon exercise of the warrants within 35 days after exercise.
The transaction includes all of Opel/Vauxhall’s automotive operations, comprising Opel and Vauxhall brands, six assembly and five component-manufacturing facilities, one engineering center (Rüsselsheim) and approximately 40,000 employees. GM will retain the engineering center in Torino, Italy.
Opel/Vauxhall will also continue to benefit from intellectual property licenses from GM until its vehicles progressively convert to PSA platforms over the coming years.
In connection with the transaction, GM will take a primarily non-cash special charge of $4.0-4.5 Bn.
Ongoing Pension Fund Commitments
All of Opel/Vauxhall’s European and U.K. pension plans, funded and unfunded, with the exception of the German Actives Plan and selected smaller plans will remain with GM. The obligations with respect to the German Actives Plan and these smaller plans of Opel/Vauxhall will be transferred to PSA. GM will pay PSA €3.0 Bn for full settlement of transferred pension obligations.
Closing Conditions
The transaction is subject to various closing conditions, including regulatory approvals and reorganizations, and is expected to close before the end of 2017.
Warrants
The issuance of the warrants is subject to the vote of shareholders at PSA’s General Meeting of May 10th, 2017. The three main shareholders of PSA (the French State, the Peugeot family and DongFeng) representing in aggregate 36.6% of the share capital and 51.5%7 of the voting rights of PSA have undertaken to vote in favor of the resolution related to the issuance of the warrants to GM. In the event the warrant issuance reserved to GM and its affiliates is not approved by PSA’s General Meeting, PSA will settle the €0.65 Bn in cash over five years.
About PSA Group With sales and revenue of €54 billion in 2016, PSA Group designs unique automotive experiences and delivers mobility solutions that provide freedom and enjoyment to customers around the world. The Group has three car brands, Peugeot, Citroën and DS, as well as a wide array of mobility and smart services under its Free2Move brand, to meet the evolving needs and expectations of automobile users. The automobile manufacturer PSA is the European leader in terms of CO2 emissions, with average emissions of 102.4 grams per kilometer in 2016, and an early innovator in the field of autonomous and connected cars, with 2.3 million such vehicles worldwide. It is also involved in financing activities through Banque PSA Finance and automotive equipment via Faurecia. Find out more at groupe-psa.com/en
PSA Group Forward-Looking Statements This press release includes forward-looking statements and information about the objectives of PSA Group, in particular, relating to the acquisition of GM’s Opel/Vauxhall subsidiary and GM Financial’s European operations, and corresponding expected synergies. These statements are sometimes identified by the use of the future tense or conditional mode, as well as terms such as “estimate”, “believe”, “have the objective of”, “intend to”, “expect”, “result in”, “should” and other similar expressions. It should be noted that the realization of these objectives and forward-looking statements is dependent on the circumstances and facts that arise in the future. Forward-looking statements and information about objectives may be affected by known and unknown risks, uncertainties and other factors that may significantly alter the future results, performance and accomplishments planned or expected by PSA Group. These factors may include changes in the economic and geopolitical situation and more generally those detailed in Chapter 1.5 of the reference document filed with the Autorité des marchés financiers (the “AMF”) on 24 March 2016 under no. D.16-0204.
About General Motors General Motors Co. (NYSE: GM, TSX: GMM) and its partners produce vehicles in 30 countries, and the company has leadership positions in the world’s largest and fastest-growing automotive markets. GM, its subsidiaries and joint venture entities currently sells vehicles under the Chevrolet, Cadillac, Baojun, Buick GMC, Holden, Jiefeng, Opel, Vauxhall and Wuling brands. More information on the company and its subsidiaries, including OnStar, a global leader in vehicle safety, security and information services, can be found at http://www.gm.com.
Who is going to design GM of North America's cars now?
If they were profitable now, why would they sell? The subtext I get is that GM expects S to go down in Europe and they want to get out while the getting is good.
In reply to Knurled:
Here's a nice primer. Not exactly work safe article heading, so, you've been warned; http://jalopnik.com/congrats-britain-you-shot-your-own-dick-off-1793004891
I would imagine GM NA's car design work will be split between US and Asian design centers in Korea and China. And I don't think GM Europe has been profitable for a very long time.
pres589 wrote: And I don't think GM Europe has been profitable for a very long time.
Over 20 years in the red from what I read in another article.
In reply to pres589:
It's brexits fault that GM has been losing their ass on those two brands for decades? I suddenly remember why I never read anything from Gawker brands.
You could also explain "GM Europe is in the red for years" by Opel basically doing most of the GM-US auto design, no?
Disclaimer: I don't know much of how they do their accounting, but it seems like the only cars GM sells that aren't Opel all over are the fullsizes (do they even make those anymore?) and Corvette.
Interesting tidbit in there about making a marker for GM to purchase Peugeot shares...
This could be an issue. LINK
Wait, so GM gets 2.2 Billion for Vauxhall, Opel, and the European branch of gm financial and in the fine print GM is also going to turn around and pay them 3 billion to settle up the European GM pension system? That pension plan must be one heck of an albatross.
Donebrokeit wrote: This could be an issue. LINK
That's been resolved already. Amazingly, GM is shouldering the burden: "All of Opel/Vauxhall’s European and U.K. pension plans, funded and unfunded, with the exception of the German Actives Plan and selected smaller plans will remain with GM. The obligations with respect to the German Actives Plan and these smaller plans of Opel/Vauxhall will be transferred to PSA. GM will pay PSA €3.0 Bn for full settlement of transferred pension obligations."
Grizz wrote: In reply to pres589: It's brexits fault that GM has been losing their ass on those two brands for decades? I suddenly remember why I never read anything from Gawker brands.
Nobody is saying that Brexit was the cause of their fortunes, but it sure made GM staying in the market a hell of a lot less lucrative. When the bottom fell out from under the GBP, Vauxhall turning a profit went from unlikely but possible to completely impossible. Sensational headline aside, the article is pretty accurate and its thesis is based on a quote from Mary Barra herself. PSA will have little use for Vauxhall's workforce aside from some possible token production to avoid import tariffs, the Opel workforce is a much more viable outfit to produce for the EU.
Knurled wrote: Who is going to design GM of North America's cars now? If they were profitable now, why would they sell? The subtext I get is that GM expects S to go down in Europe and they want to get out while the getting is good.
Umm..don't know where you get your information but GM NA will continue to design GM NA cars. Opel was involved with a few Buicks that is all.
bruceman wrote:Knurled wrote: Who is going to design GM of North America's cars now? If they were profitable now, why would they sell? The subtext I get is that GM expects S to go down in Europe and they want to get out while the getting is good.Umm..don't know where you get your information but GM NA will continue to design GM NA cars. Opel was involved with a few Buicks that is all.
Just today, I worked on a Saturn L300 and a Caddy CTS with the 3.2 engine. It doesn't get much more Opel-y than that! 
(And I'd like to have words with the person who routed the crank sensor wiring on that CTS. Loud words.)
It's sad, but I don't think they had any choice. The value of a business that has lost money for decade is zero.
I suspect the pension obligations would have been required to be settled up at some point regardless. If you think about it, defined benefit pensions are kind of crazy; the employer is essentially on the hook to guaranty the investment return over decades. Small changes in returns can create massive dependencies due to the magic of compound interest.
In reply to Grizz:
You know that global politics does impact the world of cars, right?
I was scared to post the link but I felt like it was informative. Leaving this thread now.
In reply to pres589:
No I get that, it's more that I'm surprised it's taken them this long to get rid of vauxhall and that it was likely going to go the route of Pontiac and Olds soon, brexit or not.
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