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Peugeot owner PSA discusses deal to buy GM's Opel

Peugeot owner PSA discusses deal to buy GM's OpelPSA Group, the maker of Peugeot and Citroen cars, is in talks with General Motors Co.’ about buying its European business, in a deal that would transform the region’s automotive landscape, Bloomberg said on Tuesday.

The French carmaker is viewing numerous strategic initiatives, including the possible acquisition of Opel, a PSA spokesman told Bloomberg. r

GM is seeking a multi-billion dollar amount for Opel, which also operates UK sister brand Vauxhall, because of the outlook for improved operations, according to a person familiar with the matter. Negotiations on valuations are ongoing, the person said.

A combination would create a manufacturer with about 16 percent of the European car market, leapfrogging Renault SA to become the region’s second-biggest auto group after Volkswagen AG. A deal would also be the second run at linking the two mass-market carmakers. GM, which has controlled Opel for nearly 90 years, sold a 7 percent stake in its French counterpart in 2013 after savings from a cooperation fell short of expectations.

PSA is considering the takeover to boost its scale, get access to Opel’s engineering and electric-car technology as well as reap savings from joint purchasing and eventually cost cuts. For GM, it would mark a clean exit from Europe.

Both carmakers have gone through painful restructuring in recent years. GM, which has lost billions in Europe in the past two decades, closed a factory in Bochum, Germany, the first auto plant to close in the country since World War II, while PSA shuttered a facility in the Paris suburb of Aulnay. While those moves helped ease overcapacity concerns, the two manufacturers largely target similar customers in Europe’s competitive and mature auto market.
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