GM now expects $5.5B charge from its sale of Opel

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Thread: GM now expects $5.5B charge from its sale of Opel

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    GM now expects $5.5B charge from its sale of Opel

    General Motors now expects the charge for its sale of Opel to PSA Group to reach $5.5 billion vs. its previous estimate of $4.5 billion, due to additional costs associated with the deal, Chuck Stevens, GM's CFO, said on Monday

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    I'm guessing that the deal is about done then.

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    Re: GM now expects $5.5B charge from its sale of Opel

    worth it

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    Re: GM now expects $5.5B charge from its sale of Opel

    So does this mean that GM is net negative on the sale of Opel to PSA Group?

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    Re: GM now expects $5.5B charge from its sale of Opel

    Does this include the pension obligations that PSA didn't want to take on or does that add on top of the $5.5B?
    "The irony of the Information Age is that it has given new respectability to uninformed opinion" -- John Lawton

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    Re: GM now expects $5.5B charge from its sale of Opel

    Amazing to think divisions (Opel) or entire companies (Chrysler) are given away for free vs. getting money in exchange.

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    Re: GM now expects $5.5B charge from its sale of Opel

    Quote Originally Posted by Mingo View Post
    So does this mean that GM is net negative on the sale of Opel to PSA Group?
    Yes. Several billion dollars in the negative.

    Quote Originally Posted by BlackGTP View Post
    Amazing to think divisions (Opel) or entire companies (Chrysler) are given away for free vs. getting money in exchange.
    Amazing indeed. Always makes sense when you are dealing with other people's money and not your own.
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    Re: GM now expects $5.5B charge from its sale of Opel

    Quote Originally Posted by emh View Post
    Does this include the pension obligations that PSA didn't want to take on or does that add on top of the $5.5B?
    Based on the quote below, I am assuming that the pension sum is on top of the 5,5 billion charge. The diffent sums are from different ledgers, I think

    "GM said in March that it would sell its chronic money-losing European operations of Germany's Opel and UK sister brand Vauxhall to PSA. At the time, the automaker said it would take a primarily non-cash special charge of $4 billion to $4.5 billion in connection with the sale. GM said it would pay PSA 3 billion euros ($3.18 billion) to settle transferred pension obligations."

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    Re: GM now expects $5.5B charge from its sale of Opel

    Quote Originally Posted by BlackGTP View Post
    Amazing to think divisions (Opel) or entire companies (Chrysler) are given away for free vs. getting money in exchange.
    True. It only makes sense when you expect the cost of keeping the business (or in Chryslers case: shutting down) will cost even more.

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    Re: GM now expects $5.5B charge from its sale of Opel

    Quote Originally Posted by jalberda View Post
    Based on the quote below, I am assuming that the pension sum is on top of the 5,5 billion charge. The diffent sums are from different ledgers, I think

    "GM said in March that it would sell its chronic money-losing European operations of Germany's Opel and UK sister brand Vauxhall to PSA. At the time, the automaker said it would take a primarily non-cash special charge of $4 billion to $4.5 billion in connection with the sale. GM said it would pay PSA 3 billion euros ($3.18 billion) to settle transferred pension obligations."
    This Bloomberg article has a bit more info, although it's from before the charge was increased to $5.5B. Sounds like part of that charge is related to pensions but most of it is in things like lost tax offsets.

    OTOH, the full pension obligations are HUGE. The $3.2B is only for the pensions transferred to PSA for current workers. GM is still on the hook for another estimated $9.8B in ongoing pension payments to current retirees.
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    Re: GM now expects $5.5B charge from its sale of Opel

    It's been announced today that the regulatory approval for the sale of Opel/Vauxhall to PSA has been given https://www.autocar.co.uk/car-news/i...ad-authorities - the take-over of GM's European finance arm is still under consideration.

    As posted above, the GM-PSA deal includes pensions for existing employees but not ex-employees.

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