PSA, Tata deny report on alliance talks

[nadepalma]

Tata denies report on alliance talks with PSA
November 14, 2012

BERLIN (Reuters) -- Indian automaker Tata Motors Ltd. denied a report on Wednesday that it is in talks to set up an alliance with money-losing PSA/Peugeot-Citroen.

"That is absolutely incorrect," Tata spokesman Debasis Ray told Reuters.

Citing unnamed company sources, Germany's Manager Magazin reported Wednesday that PSA CEO Philippe Varin is looking for an alternative should his company's planned alliance with General Motors and GM's European unit, Opel/Vauxhall, collapse.

CONTINUE AT: http://europe.autonews.com/apps/pbcs...talks-with-psa

[nadepalma]

Interesting news. After reading earlier that Peugeot and Opel have halted tie-up talks it maybe that PSA has either decided to eventually kill their tie-up with GM or is anticipating that GM will kill the alliance (after French government interference) and are looking for their next partner.

Of course, the even more interesting question is then why shouldn't the alliance continue. This quote makes me think that the French government has poisoned the well against the partnership:

But two sources with direct knowledge of those discussions said they were broken off after Peugeot accepted a state guarantee for its lending arm last month and announced a further deterioration of its cash position.

The automakers have agreed to a "pause" in early-stage talks on a Peugeot-Opel deal, said one of the sources. The government bailout is "sabotaging the plan", he added.

"They now consider that any deeper tie-up is unlikely before 2014, when the market picks up," another source said.

"The government bailout conditions rule out French job cuts, which means a deal can't happen any faster," he said. "It would be politically impossible to have all the cuts falling on the German side."

So instead of helping the company recover and thrive (and do what everyone knows has to be done), the French government is "sabotaging" the talks to save French jobs --- with Tata waiting in the wings?

[akbar]

I really cannot fault any government that tries to protect its industry that has a significant impact on welfare of large portion of its citizens and thereby the overall economic base of the country. They either give out doles to have people working or give out doles for people to not work.

[DOCTOR]

I really cannot fault any government that tries to protect its industry that has a significant impact on welfare of large portion of its citizens and thereby the overall economic base of the country. They either give out doles to have people working or give out doles for people to not work.

I agree with your sentiment but PSA /Tata / GM / Ford and all are commercial operations and as such must operate under commercial rules of business. The government bailout of GM and Chrysler in the US did have the effect of pruning both companies and forcing them to take the "difficult" decisions in order to survive, on the face of it the French government are trying to offer support without any capacity "pruning" or other structural changes. PSA (and Renault) are in a death spin at the moment for sales and are possibly even more vulnerable than GM and Ford in Europe. I don't blame Tata for keeping well away from this.

[jpd80]

I'm sure that at the time GM would have denied that they had discussions with Ford regarding a "merger".

Companies need to have back channels to explore possibilities and opportunities before they become public knowledge
and when these approached don't pan out it's better to say that there are no plans for a merger or JV and move on