LONDON/FRANKFURT, Feb 22 (Reuters) - French carmaker PSA Group aims to generate annual cost savings of between 1.5 billion and 2 billion euros ($1.6 billion-$2.1 billion) from its proposed acquisition of Opel from General Motors, two sources told Reuters on Wednesday.
The savings will come mainly from purchasing and research and development as the Peugeot maker pools underlying vehicle architectures and engines with GM’s European business, eliminating duplicate technologies, the sources added.
Paris-based PSA and GM confirmed last week that they were in talks over a PSA-Opel tie-up to create Europe’s second-largest carmaker by sales after Volkswagen.
The disclosure sparked concern for the future of GM’s Opel and Vauxhall plants in Germany and Britain, home to most of the group’s 38,000-strong European workforce.
Discussions with political and labour leaders may delay the conclusion of a deal, which both carmakers now hope to announce in March, two sources with knowledge of the talks also said.
Exane BNP Paribas analyst Dominic O‘Brien said savings of 2 billion euros could be achieved with 1.2 billion euros from joint purchasing, 400 million from R&D and another 400 million from the eventual elimination of 6,000 jobs.
“The most obvious starting point for any restructuring of course lies with labour,” O‘Brien said, adding that layoffs would be more likely “via attrition and voluntary rather than compulsory”.
PSA boss Carlos Tavares is due to meet British Prime Minister Theresa May after giving assurances on Tuesday to German Chancellor Angela Merkel that all existing GM job guarantees would be honoured under the deal.
GM’s existing German job guarantees run to the end of next year and plant commitments until around 2019-20, unions say.
The new group would have 75 billion euros in revenue and a 16 percent combined European market share, which shrank last year as both groups lost ground to rivals including VW and Renault. ($1 = 0.9512 euros) (Additional reporting by Laurence Frost; Writing by Laurence Frost; Editing by Alexander Smith)