PSA Pegout SA (PEUGF) shares surged to a near five-and-a-half year high Monday after it purchased General Motors' (GM) Opel subsidiary and the captive financing units of the carmaker's European brands.
PSA will buy the Open and Vauxhall brands for around €1.3 billion while PSA and BNP Paribas will take joint 50% stakes in Opel/Vauxhall financing for around €900,000, the companies said in a statement, creating Europe's second-largest carmaker behind Volkswagen AG (VLKAY) with a 17% market share. Opel and Vauxhall has around €17.7 billion in revenues last year. Peugeot's 2016 revenues were €54 billion, €37 billion of which came from automotive sales.
Peugeot shares gained 2.18% in the first hour of trading in Paris to change hands at €19.45 each, the highest since September 2011, while GM shares ended Friday's session in New York up 1.24% at $38.23 each.
"We are proud to join forces with Opel/Vauxhall and are deeply committed to continuing to develop this great company and accelerating its turnaround," said CEO Carlos Tavares. "We respect all that Opel/Vauxhall's talented people have achieved as well as the company's fine brands and strong heritage. We intend to manage PSA and Opel/Vauxhall capitalizing on their respective brand identities."
"Having already created together winning products for the European market, we know that Opel/Vauxhall is the right partner," Tavares added. "We see this as a natural extension of our relationship and are eager to take it to the next level."
GM will get around €1.32 billion, including €650 million in cash and €670 million in PSA warrants, for the sale of the Opel/Vauxhall operating divisions. The sale of the captive financing units will earn GM around €900,000 and save it around $2 billion cash balance requirements, the statement said, which it will use to accelerate share buybacks.