German minister backs Peugeot-Opel deal after GM assurances

Thu Feb 16, 2017 2:34pm EST
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By Pamela Barbaglia and Ilona Wissenbach

LONDON/FRANKFURT (Reuters) - Germany expects PSA Group's (PEUP.PA: Quote) proposed acquisition of General Motors' (GM.N: Quote) Opel business to go ahead, a minister said on Thursday, after the U.S. carmaker sought to allay fears of large-scale plant closures.

"I expect it to take place," Economy Minister Brigitte Zypries told reporters after discussions with senior executives from General Motors and PSA, maker of Peugeot and Citroen cars.

The German government is "doing everything we can" to preserve Opel's domestic plants, Zypries said.

Talks on a sale of GM's European arm to PSA were confirmed by both companies on Feb. 14, causing alarm in London and Berlin over possible job cuts. Germany accounts for half of GM Europe's 38,000 staff, with 4,500 in Britain where the company operates under the Vauxhall brand.

Two sources close to PSA said on Thursday that job and plant cuts were part of the tie-up talks, with the two Vauxhall sites in Britain in the front line.

However British business minister Greg Clark said he had been told by GM President Dan Ammann that there was no plan to scrap the Vauxhall plants in the UK.

"I was reassured by GM's intention, communicated to me, to build on the success of these operations rather than rationalize them," Clark said in a statement, vowing to maintain "close contact" with both carmakers as talks progress.

Little is known about the terms of the proposed PSA-Opel deal, or whether GM would even keep a stake in the combined entity. PSA declined to comment on the talks or the prospect of restructuring.   Continued...

General Motors CEO Mary Barra presents the new Opel Astra during the media day at the Frankfurt Motor Show (IAA) in Frankfurt, Germany September 15, 2015. REUTERS/Kai Pfaffenbach