GM Strikes a Deal to Sell Its Money-Losing Opel Brand

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A person briefed on the matter says French carmaker PSA Group is expected to announce Monday that it has purchased General Motors' European auto business.

This reported deal would provide the PSA Group with a 16.3% share in the Europe's small vehicle market, making it the second largest European auto company, ahead of Renault SA, but behind Volkswagen.

The first models jointly developed under their five year-old partnership will be on display at the Geneva show, which opens to the press on Tuesday.

PSA boss Carlos Tavares said last week a full acquisition of Opel offered an "opportunity to create a European auto champion" and quickly exceed 5 million annual vehicle sales.

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According to Reuters, the deal struck between the two carmakers includes "non-compete" agreements that will block Opel's new owners from competing against Chevrolet-badged cars in regions including China and "other overseas markets".

GM shares rose 1.4% to $38.28 in afternoon trading Friday on the news.

The French group also expects savings of up to 2 billion euros ($2.1 billion) from the tie-up.

PSA likely used a non-compete clause to help convince GM to pay more into the pension.

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PSA Group has already met with Opel representatives, framing the takeover as a potential "rebound of the company and its iconic brands".

GM and PSA five years ago announced a 10-year alliance that aimed to save $2 billion annually by 2017.

In his public comments on February 23, CEO Tavares said he saw export potential for the Opel brand under PSA ownership.

Citing an unnamed source, Reuters says board members for PSA approved the deal today.

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