DETROIT France's PSA Group (PEUP.PA) said on Monday it agreed to buy Opel and its British Vauxhall brand from General Motors (GM.N) in a deal valuing the business at 2.2 billion euros ($2.3 billion).
Below is a summary of some details of the transaction, which is expected to close in 2017:
- GM will receive 1.32 billion euros for the Opel manufacturing business in the form of 650 million euros in cash and 670 million in PSA share warrants.
- PSA and BNP Paribas (BNPP.PA) will pay 900 million euros for Opel's financing arm, to be operated jointly and consolidated by the French bank.
- PSA says it will return Opel and its British Vauxhall brand to profit, with an operating margin of 2 percent within three years and 6 percent by 2026.
- PSA says profit can be achieved in part through 1.7 billion euros in joint cost savings. In a client note, Barclays equity research analysts said this was below the 2 billion euros in savings targeted by GM and Opel in 2012.
- The Opel sale cuts GM's cash balance requirement by $2 billion, allowing it to accelerate share repurchases.
- GM will record a special, non-cash charge of $4 billion to $4.5 billion.
- GM will retain $6.5 billion in underfunded pensions at Opel.
- The U.S. automaker will also issue $3 billion in debt toward covering some $3.2 billion in underfunded pensions that will be transferred to the German government.
- GM says that without Opel, its adjusted earnings per share in 2016 would have been $6.40, versus its reported total of $6.12. The company's adjusted margin would have been 8.6 percent, versus the 7.5 percent the Detroit-based company reported.
- Opel has six assembly plants, five component plants and around 40,000 employees.
($1 = 0.9432 euros)
(Reporting By Nick Carey; Editing by Meredith Mazzilli)