The maker of Peugeot and Citroen cars will pay 2.2 billion euros for GM’s Opel unit and its U.K. sister brand Vauxhall. This deal that will make the Peugeot and Citroën owner the second-largest carmaker in Europe.
“It gives us the opportunity to become a real European champion,” PSA Chief Executive Officer Carlos Tavares said after announcing the deal, which reinstates the French company as the region’s second-biggest auto manufacturer. “Our plan is to build a common future for Opel and Vauxhall and fix the existing issues.”
GM, which has owned Opel for almost 90 years, is cutting ties after the division missed a target to break even in 2016, contributing to losses that have totaled about $9 billion since 2009.
In addition to the charge, GM is on the hook for much of Opel’s pension obligations and will pay PSA 3 billion euros to settle some retirement plans.
PSA is the European Union’s third-biggest automaker, with 9.9 percent of the market in 2016, according to the European Automobile Manufacturers Association. The purchase of Opel, which holds 6.7 percent of the market, would help the company vault past Renault into second place.