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GM Buys Into Depressed Europe Via Peugeot

DETROIT (TheStreet) -- GM (GM) said it has signed a strategic alliance with French automaker Peugeot.

GM will buy 7% of PSA Peugeot Citroen, becoming the company's second-largest shareholder and strengthening its position in Europe at a time the valuation of European assets is low.

As part of the deal, Peugeot will raise about $1.3 billion through a rights offering, underwritten by a bank syndicate and an investment from the Peugeot family.

"This partnership brings tremendous opportunity for our two companies," said GM CEO Dan Akerson, in a statement. "The alliance synergies, in addition to our independent plans, position GM for long-term sustainable profitability in Europe."

Alliance synergies would include shared vehicle platforms as well as a joint venture combining about $125 billion in annual purchases of commodities, components, other goods and services. Synergies are expected to produce annual savings of $2 billion annually within five years, with little benefit in the first two years.

Initially, GM and PSA Peugeot Citro├źn would focus on small and midsized passenger vehicles, with the first vehicle on a common platform expected to launch by 2016.

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here: Ted Reed

>To follow the writer on Twitter, go to http://twitter.com/tedreednc.

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Stock quotes in this article: GM 

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