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GM, PSA said to value Opel at $2 billion as talks advance

7K views 105 replies 31 participants last post by  kts3502.0 
#1 ·
GM, PSA said to value Opel at $2 billion as talks advance
February 17, 2017 @ 12:42 pm
Aaron Kirchfeld, Siddharth Philip, David Welch and Christoph Rauwald
Bloomberg via AutoNews.com

General Motors Co. and PSA Group are discussing a valuation for GM's Opel unit of about $2 billion as the automakers push to reach an agreement as soon as the end of next week, people familiar with the matter said.

The price tag would comprise about $1 billion in cash and assuming roughly $1 billion in liabilities, said the people, who asked not to be identified because the negotiations are private. The amount is still fluid as the two assess factors such as pension liabilities, the value of brand rights and savings potential, the people said.

The manufacturers are working to complete the framework of a deal for PSA to buy Opel as soon as next Thursday, when the maker of Peugeot and Citroen cars reports full-year earnings, the people said, adding that an agreement could end up being delayed due to the complexities and talks could also still fall apart.

CONTINUE AT LINK ABOVE
 
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#4 ·
Wow, the RKM Banksters and Media are all over this - whew.... epic manipulation.....
 
#20 ·
#26 ·
This sale is a big mistake for GM. They should have focused on improving Opel, not by introducing a slew of new products in categories in which they already compete, but by moving up market to the premium luxury segment- turn Opel into a Volvo, use the Alpha architecture to the max (Cadillac refuses to re-enter Europe so no overlap), you get a BMW beater at a Volvo price and you get to sprout all that bull about German engineering. Opel was never going to make GM money with the current high labour costs in Western Europe without going up market, and to go up market they should have gone RWD for Astra, Cascada and Insignia. But even not having done that, this sale is bad for GM, they severely underestimate the added costs of the hugely reduced scale they will be faced with if the sell Opel, the engineering costs divided by so many fewer vehicles will add costs to those vehicles that easily exceeds the $8b lost over the last few years!
 
#29 ·
Volvos sell at BMW prices.

Shedding Opel and THEORETICALLY tying up with PSA in an expansive relationship would end up increasing scale for both companies and cutting off GM's deadweight in Europe while giving PSA a big boost in marketshare.

I think it's a likely scenario, were the Opel sale to happen (which I don't buy).
 
#43 ·
Well, no surprise here with the numbers and how they illustrate nicely - this is not about the best For GM, but rather about the best for some outside Agenda.

Ford and Toyota - and Daimler and a bunch of Banksters plus Friends ...... just have to be smiling....... if not in fact laughing themselves silly while they drink heavily.

Even assuming additional positive from the Vauxhall / whatever else not included - part of the Equation.
 
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#46 ·
With the quantity of drinks they had taked, they should be careful to watch for the steps or they'll do a misstep.

Meanwhile on a off-topic sidenote, I spotted that post from a guy nicknamed Muther on Allpar who might give more food for thoughts. ;) https://www.allpar.com/forums/threa...ath-are-greatly.166926/page-4#post-1084835115

I am telling you. This depends a lot on the current and future market. If the market stays lively, and FCA is able to pay its debts, and even start banking some ducats, THAT will be huge. THAT will be the game changer. If that happens, FCA will have all of its options open.

It could then be strong enough to continue on its current course as its own company, then begin to expand organically as it so chooses.

It could seek a merger partner, where it would have the ability to dictate terms, or it could, if it had the cash, buy other firms.

It is the debt, that albatross around its neck, that MUST be dealt with first. Once that mountain has been climbed, it is a whole new ballgame.
 
#48 ·
I think GM has come to the realization they dont have a clue.............so they will concentrate on China and the US, and leave the rest of the world to the grownups.
 
#49 ·
If GM is not serious about participating in Europe with the kinds of vehicles
that buyers want and also make a lot of money, then they should exit.

It's clear that GM is now very North America centric and its focus clearly
on its domestic sales and building China as its other income stream
and to hell with anywhere else....
 
#50 ·
GM will take payment in a PSA stock so it ll be a good move by both. GM needs to get out of Opel. It's been losing billions for years...

Europe is a mature market and besides the future in Europe will be in Chinese built vehicles shipped into Europe to massacre the market there anyway....

Jmo
 
#51 · (Edited)
I haven't seen it yet, so I'll put it out there.

Holden wasn't having sustaining sales, and Opel also had issues; but both have/had really cool stuff.

GM is a little shy now about losing money, so they are going to be a little more proactive than the last go round in '08.

But what's not been said is that I think they read Brexit, nationalism, protectionism, a major swing of far right governments, the apparent weakening in in the EU, and subsequent anti-global trade is going to wreck havoc on car purchases, car prices, and the ability of people to purchase cars and this is all coming about now and will be further exacerbated by geopolitics.

All signs point to global recession at the least and they're spooked.

They don't want or need FCA, can't afford Holden or Opel/Vaux, and things have only started getting worse.

They're putting out the storm shutters, and concentrating on where money can be made; here and China.

I don't like seeing Holden shuttered, I don't like seeing Opel/Vaux sold, and I don't like seeing Chinese GM vehicles going anywhere but China, but I think they are seeing a coming bleakness, while I am certainly no GM apologist, I think what they are doing is right, and they had/have to do it.

On top of the issues I listed above, there is the story on the front page here about subprime loans being +61 days, and when that starts happening, bad things are going to happen.

All the signs are there, and should they not take these steps, they'd be crucified for never having learned The Lesson, and they bled pretty heavy the last time around.

The don't want to go back to that.
 
#53 · (Edited)
With the exception of two years, Holden has actually lost money every year since 2004.

It actually conjured a profit in 2015 by reversing a decision to keep Holden Engineering ($79 M)
and a $70 M government assistance package. without both of them, Holden's $128 M profit
becomes a $21 M loss.

Yes, on the other side of closures, Holden will probably return to profit but let's not kid ourselves
that the losses for Holden were indeed there and stretching back over at least ten years or so.
 
#58 ·
Having worked for a multi-national in the past, I do know that published figures mean whatever the top management wants them to - they categorically do NOT reflect the profitability/viability of individual business units.

The irony is that as GM retreats from Europe and Australia to become a US-China business, the accounting opportunity to move or capitalize costs/benefits gets less and less - so the real truth may soon be known.
 
#61 · (Edited)
I know the plan has been/is having global platforms, and I don't much like the sound of this myself.

Rather than build something in one country and something else in another country, they intend to have a sort of Lego modular building philosophy, and so the identity of one platform of cars becomes the platform of every car around the world in that specific size of vehicle.

I always liked the flavor of Holden's work in Australia; I've always had a great respect for how they saw vehicles, how they were powered, and how the character of Australian vehicles always made me smile. Opel made some pretty nice cars, and they projected GM attributes into a far flung region of the world, from Detroit. What we are seeing in vehicle production is the work of years prior planning, so with the more recent change in direction and the cars just coming online now, there is a little bit of incongruence with what I think they have come to in terms of corporate direction and the sales markets they want to concentrate on and what they want to avoid.

Trucks having their own singular world platform; we've seen the breakdown of the phases of going from non world platforms to all world platforms. This is to save money on engineering and provide greater component versatility.

Again I do not like the cookie cutter approach to building cars, but sadly, these are new days in vehicle manufacturing, and I am decidedly old school.

These platform plans and even new vehicle introductions were hatched long before the current geopolitical trends could be seen, back when global manufacturing was still considered a good thing. I think Brexit scares the bejeesus out of international manufacturers, and I think the Authoritarian leanings of more and more governments around the world signal a future out of the dark past. It's not just Britain, it's France, Italy, Scotland and others coming to a far right wing nationalism which will divide Europe and destroy the trading patterns that have been in place for decades. Duterte doesn't help either, in the Asian market. Division in Europe also brings a threat of war from opportunistic powers, some of whom have been helping drive this division. That is not an environment of higher profit and sales.

It remains to be seen how well this works in a coming time of nationalism and protectionism, but still it does reduce the cost of engineering, and make vehicle design sort of plug and play. It's sort of counter to having a world platform strategy that has come to fruition, while at the same time, also pulling back from Europe and Australia, but that is the clash of the product planning of years ago and the current and foreseen future realities of the market, that is driving their decisions with regard to Holden and Opel. I shudder to think what more might come out of this, of what we don't know yet.

I don't like it at all, I'm pissed that the politics and market forces have made this necessary, and I think a big part of the soul of vehicle character is dying, but I think I understand that they are, for once in their existence, trying to be proactive, and cover their asses.
 
#63 ·
"U.K. households are beginning to feel the pain of Brexit.

Retail sales in the U.K. unexpectedly dropped for a third consecutive month in January, according to the Office for National Statistics.

Sales dropped by 0.3% last month, compared to a 0.9% increase expected by analysts. The bad news didn't stop there: the ONS also said that retail sales dropped by 2.1% in the month leading up to Christmas, a steeper decline than previously thought.

Kate Davies, a senior statistician at the ONS, said that higher fuel and food prices are to blame for the slowdown. Sales were down in both conventional stores and online.

Investors reacted by pushing the pound lower 0.6% against the dollar to $1.24. That's 17% below the levels seen on the day Britain voted to leave the European Union.

The sharp drop in the value of the pound following the referendum is translating to higher prices for imported goods, such as food and electronics.

"We have seen that wages are not improving while inflation is moving higher," said Naeem Aslam, chief market analyst at Think Markets. "Higher prices are biting."

Inflation jumped to 1.8% in January, compared to 1.6% the previous month. Capital Economics predicts it will breach the central bank's 2% target next month.

The U.K. economy showed remarkable resilience in the aftermath of the referendum. Consumer spending had been particularly strong, defying the expectations of most economists.

Now, it looks like consumers are starting to buckle under the pressure of higher prices.

"These figures provide the clearest evidence yet that rising prices will squeeze consumer spending throughout this year and into 2018," said Andrew Sentance, senior economic adviser at PwC."

http://money.cnn.com/2017/02/17/news/economy/brexit-retail-sales-down/index.html





May is telling the UK that they are free to make new deals, but in the meantime, the pound has plummeted, international's are pulling back and people aren't spending as much for the past 3 months.

UK citizens living in the EU are being told that they will no longer be able to stay and may have to return to Britain, there's a downturn in Ireland as well, and while they say they are free to make new deals, the process of Brexit hasn't even really started, and the negotiations are beyond Brexit having actually occurred. There's a veritable time out period going on, and the uncertainty and loss of buying power has already shown consistent pressure on the economy as a whole.

Brexit is squeezing them and car sales are sure to be lower.

As the economy spirals down job losses can be expected, adding to the overall spiral down, and things will most likely not improve in the near term; long term, improvement is but mere potential at this point. Trade deals hinge on how well the overall world economy is doing at that time.



Again, I don't like the new engineering nor the business and marketing strategy of GM, but they are taking proactive steps while others seem to be dangerously optimistic.

How well Ford handles this, if they do nothing different to protect themselves, is anybody's guess, but if cars aren't selling, no matter how well positioned, I think losses will occur.

GM doesn't want to be dancing when and if the music stops, and has taken a chair.

Reentry into Europe can be done after the economy ravages those who remained in the game, and could be had at bargain prices, for those with deep pockets who have weathered the storm.
 
#66 ·
Don't ever judge anything to do with Brexit on one article - almost half the UK is still trying to talk it down in the same way as they did during the Referendum campaign.

Money markets don't like uncertainty and uncertainty will continue for another couple of years because the EU won't even start negotiation until Article 50 is triggered so another month or two for that to happen. There will be no gain without pain, no-one in the UK doubts that - but with every business hurdle comes a business opportunity for those light enough on their feet to react.

As the dust settles, the UK will import fewer cars from the EU, the UK will buy more UK-built cars - remind me again of the downsides of that from the UK point of view? Outside the EU, the UK will be able to negotiate it's own trade deals far more quickly than the EU can (10 years and still no US-EU trade agreement). Having endured decades of pain and humiliation, the UK car industry is currently healthy - it's very lean and efficient.

The EU remainder will sell fewer cars in the UK, that'll have an effect on PSA-Opel, and all the other mainland European manufacturers.
 
#69 · (Edited)
Or like when Ford sold J/LR and Volvo for what seemed like bargain basement prices
until you read ithe fine print, the new owner had to agree to fund in full the whole
product cycle development costs for each brand.

Buying a brand for around $2 billion but then having to spend around $10 Billion or more
on funding the next product cycle for all cars is a step learning curve indeed...
 
#72 ·
Today the BBC revealed that the deficit in the Vauxhall pension scheme, so UK only, was £0.84 billion UKP (about $1.05 billion USD at today's exchange rate) at the end of 2014 and likely to have grown since then http://www.bbc.co.uk/news/business-39021319
That's disgusting.

Vauxhall have been boasting about their profitability for the past 3 years, well, prior to brexit vote at least. And yet they forgot to pay for their pension obligations? Is GM also delaying pension, salary and bonus payments to Mary Barra?
 
#73 ·
How do you know they forgot to pay their pension obligations? Most pension shortfalls are the result of declining value in the contributions made in the past. How many of you know that the $2 billion valuation is before taking in to consideration the liabilities of the company including pension shortfalls?
 
#87 · (Edited)
Where exactly - and exactly how.

Lot of those boats are already gone - have to wait for the return trip and turn around..... and then the ticket will not be cheap.

Every single market has too much capacity.

Every single Market is softening substantially as we speak.

Every single Market has serious structural distortions that are not going to take the strain much longer.... they are all in fact balloons ripe for serious correction .... eh.... or even over ripe for a complete bust.

Other than something truly radical with Fuel Cells......

Unless you think that something like a 'real quick' extra 2 Million Autonomous Bolts / and Volts are some kind of really special answer to rapidly increasing market success and profitability.

You think more faster with all the BS Hi Tech stuff that is allowed and being actively promoted is somehow going to end up making money soon, while not requiring as much or more than Opel / Vauxhall - who also could benefit from that very same tech ?

If so..... show how and some of the numbers.

Yes, future income / profit streams and losses do matter.

That's all a given... and not the meat of the what ifs.

One, you have many implicit assumptions starting with first and foremost that this is not being shoved down GM's throat.

Given all the run up to this, for GM and the many others that we do in fact know stone cold, that seems every bit as likely or more so than all this other.

Because Ford and Toyota are in fact so far off the desired pace in so many ways.

Do not forget the Master Plan..... Toyota #1, and Ford #2 and GM and some others ( but not FCA ) well 'whatever'....... and all the chosen ones at least highly profitable.

Two, you automatically assume Opel / Vauxhall cannot ever be made right under GM - yet somehow at least Opel is gonna' make super good sense for PSA and quickly..... and during this next turn of the wheel - including in Europe.

If Opel and Vauxhall have such dim future prospects why would anyone even take a look at them never mind make a purchase ?

Three, you either assume GM does not need to have some sort of meaningful presence in Europe to maintain a very necessary large Global footprint or else its' purchasing costs will go thru the roof. Or instead, assume some kind of likely super cheap and super unrealistic assumption they can just roll in somehow 'later'.

You also seem to be possibly assuming that the assumptions concerning the European market are somehow different for OV under GM than for any other OEM / brand pairing - else they have it all wrong to stay.

You know, it isn't as if Buick, Cadillac, and Chevrolet are ready to take on Europe, win, and win big. Not even within Five Years of any of that.

So what else is really left ?

Need to cover or get prepared to cover ( a topic in itself ) shorts that are developing or are now forecast as at least possible.... in other parts of the Companies activities ?

Only other WAG would be part of a very risky two or three stepper involving FCA ... maybe some others..... and one not at all as some many here like to think it would go.

Looking more and more like a WS forced Short Term play that will benefit others more so than GM once we get past that 'Short Term'.

Maybe even help save Ford if the environment goes any number of ways.
 
#94 ·
Ah but the men from Detroit know best......

Our two far flung divisions of Ford and GM flourished while they stayed under the radar but
the moment both tried to promote their vehicles as global possibilities everything changed.

While the shift in buyer preference to Utilities cannot be denied, I'm sure that Holden could have
easily developed a mid-sized ute of its own as companion to the Commodore, something that
would have bolstered local production as the Territory did for Ford's Falcon production.

The optimist in me says that,
Given the right platform parameters, Holden could have developed a mid sized Torana and Commodore
as well as the aforementioned Utility. Those three vehicles and derivatives would have covered a
significant percentage of the market in segments where buyers are open to RWD vehicles with zip.
 
#98 ·
Could GM transfer its Opel-Vauxhall to PSA, do a backwards merger and acquires a controlling interest on PSA?

Ctroen-Opel-Vauxhall re organize into a three brand strategy for Europe and ROW markets while GM is in control
but still free to pursue its own objectives in Nth America and China.
 
#105 ·
2B sounds very low. If there's over capacity for all manufacturers in Europe, how is any of this going to help but put PSA in great debt? Auto manufacturers can't just look to China for all their future growth and pull out of mature markets which then give Korean and future Chinese makers future growth world wide.
 
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