General Motors could acquire up to a 7% stake in PSA Peugeot Citroen, according to strong industry rumours, and an announcement could be made within the next few days ahead of next week’s Geneva show.
Sources told Bloomberg News a deal would involve a standstill agreement by which GM would not take a greater holding in PSA without permission. Additional PSA shares may be offerered through a rights issue as part of the transaction.
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GM is struggling in Europe with its unprofitable Opel brand and such a deal could reduce costs in terms of engine development and joint assembly to reduce overcapacity in the region.
GM’s European business, including the Opel brand, lost US$747m last year before taxes and interest, an improvement from US$1.95bn lost in 2010, but the plan was to break even.
PSA’s sales in Europe last year fell 8.8% to 1.68m while GM was down in the region 1.9% to 1.17m.
Earlier this month, Peugeot CEO Philippe Varin said the company was willing to investigate partnerships as long as they were in line with the group’s strategy, including expansion outside Europe, and contributed synergies while maintaining Peugeot’s independence.
At the Detroit show in early January, there were rumours that PSA was talking to Fiat about a possible alliance.
Peugeot, whose carmaking division missed a target of breaking even in 2011, said on 15 February it will sell property as well as a holding in the Gefco trucking unit that has yet to be determined. The disposals include the Citer vehicle rental unit that Peugeot sold to Enterprise Holdings on 1 February for EUR440m.
Earnings before interest, taxes and one-time gains or costs fell to EUR1.32bn in 2011 from EUR1.8bn a year earlier, Peugeot said this month. The company’s deliveries globally fell 1.5% to 3.5m vehicles in 2011, led by the drop in Europe.
