Bosses defend Peugeot-Opel deal under political fire

Wed Feb 15, 2017 12:52pm EST
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By Arno Schuetze and Laurence Frost

FRANKFURT/PARIS (Reuters) - PSA Group (PEUP.PA: Quote) and General Motors (GM.N: Quote) mobilized their chief executives on Wednesday to defend the Peugeot maker's planned acquisition of GM's Opel against a German-led backlash that could derail the deal even before its terms are finalised.

Fearing job losses, Germany's federal government and powerful unions have heaped criticism on the tie-up plan, confirmed by both manufacturers on Tuesday. Britain also said it had contacted GM President Dan Ammann to express concern over the future of Opel's UK plants.

Paris-based PSA said it would despatch CEO Carlos Tavares to meet German labor and political leaders likely to include Chancellor Angela Merkel, as his GM counterpart Mary Barra visited Opel headquarters near Frankfurt.

Tavares, expected to head the combined company if the deal goes through, "wants to meet Opel's German stakeholders", a PSA spokesman said, adding no date had yet been set for those talks. The French carmaker had no further comment.

PSA and GM have declined to say what cuts they would make to jobs, plants, production capacity or research and development under the deal being discussed. Of GM Europe's roughly 38,000 staff, about 19,000 are in Germany and 4,500 in Britain.

While little is known about its financial or operational terms, the prospects for a combined PSA-Opel have so far drawn only lukewarm investor enthusiasm.

PSA shares fell almost 1 percent, reversing part of Tuesday's 4.3 percent gain after some analysts cautioned that significant cost savings would be needed to offset the combined company's dependence on Europe's competitive, mature market. GM shares were 1.5 percent lower at 1730 GMT.

Key savings in production and research and development could prove elusive if the companies are forced to guarantee jobs and industrial sites to secure government and union acceptance.   Continued...

The Opel headquarters are pictured in Ruesselsheim, Germany February 14, 2017.  REUTERS/Ralph Orlowski