GM to take 7% of Peugeot in strategic alliance
The struggling French automaker PSA Peugeot Citroen and US giant General Motors announced Wednesday a strategic alliance that will see GM take a seven percent stake in Peugeot.
In a joint statement, the two companies announced "the creation of a long-term and broad-scale global strategic alliance that will leverage the combined strengths and capabilities of the two companies."
The agreement, they said, will "contribute to the profitability of both partners and strongly improves their competitiveness in Europe."
GM and Peugeot are to focus on sharing vehicle platforms, components and modules and on creating a global purchasing joint venture for sourcing commodities and other goods and services from suppliers.
As part of their deal, the French firm is to raise about 1 billion euros ($1.3 billion) "through a capital increase with preferential subscription rights for shareholders of PSA Peugeot Citroën, underwritten by a syndicate of banks and including an investment from the Peugeot Family Group," the statement said.
"As part of the agreement, which includes no specific provision regarding the governance of PSA Peugeot Citroen, GM plans to acquire a seven percent equity stake in PSA Peugeot Citroën, making it the second largest shareholder," it added.
"This partnership brings tremendous opportunity for our two companies," GM chairman and CEO Dan Akerson was quoted as saying.
"The alliance synergies in addition to our independent plans, position GM for long-term sustainable profitability in Europe."
Philippe Varin, chairman of the PSA managing board, said: "This alliance is a tremendously exciting moment for both groups and this partnership is rich in its development potential."
Cost savings expected from the deal were estimated at about $2 billion annually within about five years, shared evenly between the two companies.
© 2012 AFP