PARIS -- General Motors and PSA Group will hold a press conference on Monday morning, with the subject expected to be the acquisition by PSA of GM's money-losing Opel unit.
The press conference will be on Monday at 9:15 a.m. CET (3:15 a.m. ET), the companies said on Saturday, without specifying the subject. GM also scheduled a conference call for media in Detroit at 10:30 a.m. ET.
PSA is expected to pay between 1.6 billion and 1.8 billion euros ($1.7 billion-$1.9 billion) for Opel, French business paper Les Echos reported. PSA will pay half the sum immediately and half in shares, which means GM will become a PSA shareholder.
GM will retain on its balance sheet the vast majority of pension provisions for Opel employees working in Germany and the UK, the paper said. "PSA will have no exposure to this risk," a source told the paper.
PSA will be allowed to continue selling Opel models developed with GM's patents including the full-electric Ampera-e, a sister model to the Chevrolet Bolt, but would pay license fees, according to Les Echos. The automakers have agreed to restrict the sale of some Opel models outside of Europe for a set time, the paper said, but details of which markets will be off limits to the German automaker were not yet known, the paper said.
PSA and a financial partner will acquire the Opel bank as part of the deal, Les Echos said.
PSA and GM have been holding talks for months about PSA buying GM's Opel unit and its UK sister brand Vauxhall. The tie-up was approved on Friday by the PSA supervisory board, on which the French government, Peugeot family and China's Dongfeng Motor are represented as shareholders, Reuters said. GM does not need board approval, Les Echos said.
Sticking points in the discussions were PSA's ability to sell Opel vehicles globally and how GM and PSA would manage the pension plan for Opel and Vauxhall retirees, reports said. The program is underfunded by about $9 billion, according to data compiled by Bloomberg. GM initially offered $1 billion to $2 billion.
Chevrolet/Opel competition
The talks also encountered difficulties over GM demands that a PSA-owned Opel be barred from competing against its Chevrolet lineup in China and other overseas markets and GM's right to bring Chevrolet branded models to Europe down the line, Bloomberg reported.
By acquiring Opel, PSA will become Europe's second-ranked carmaker after Volkswagen Group by market share. Between them, PSA and GM Europe recorded 71.6 billion euros ($76 billion) in revenue and 4.3 million vehicle deliveries last year.
GM came close to selling Opel to Magna International in 2009. CEO Mary Barra has faced investor pressure to offload its struggling European arm and focus on raising profitability rather than chase the global sales crown currently held by VW. After fending off 2015 merger overtures by Fiat Chrysler Automobiles with support from her board, Barra agreed to target a 20 percent minimum return on invested capital and pay out more cash to shareholders.
For PSA, the Opel deal caps a stellar two-year recovery under cost-cutting CEO Carlos Tavares, who said on Feb. 23 he would apply the same methods to Opel if the deal went through. PSA averted bankruptcy by selling 14 percent stakes to France and Dongfeng in 2014, to match a diluted Peugeot family holding.
The acquisition offered an "opportunity to create a European car champion" and quickly exceed 5 million annual vehicle sales, Tavares told analysts as he presented full-year earnings last month. PSA also expects savings of up to 2 billion euros ($2.1 billion) from the tie-up, sources have said.
Tavares also told his board that PSA would redevelop the Opel lineup with its own technologies to achieve rapid savings, Reuters reported.
GM and PSA already share some production in an existing European alliance. er.
'No cross-shopping'
Tavares said on Feb. 23 that he sees the possibility to expand Opel sales into global markets, although he declined to answer if North America was a possibility when asked. Opel does not have this option under GM, he said. Tavares does not see Opel cannibalizing sales of PSA's Peugeot, Citroen and DS brands. "There is almost no cross-shopping between PSA brands and Opel," he said.
Opel has scheduled a town hall meeting for workers at its headquarters on Monday morning at 9.45 a.m. local time, a person familiar with the arrangements said.
Opel CEO Karl-Thomas Neumann will speak at Monday's joint PSA-GM press conference in Paris.
GM's European arm recorded a 16th consecutive year of losses in 2016.
Reuters and Bloomberg contributed to this report
