General Motors to Buy 7-Percent of Peugeot

General Motors to Buy 7-Percent of Peugeot

As part of a development alliance, it appears that French automaker PSA Peugeot Citroen will be selling 7-percent of its company to General Motors this week.

If the deal is to go through, it will include a standstill agreement in which GM would not be able to take a greater holding of Peugeot without permission. Peugeot however may offer additional shares through a rights issue as part of the transaction.

A person familiar to the matter told sources that a GM-Peugeot alliance would involve co-developing engines and building vehicles together in the region. This all makes sense for GM, as the world’s largest car maker continues building alliances worldwide. More importantly however, this will assist in turning around the Opel brand to hopefully be a profitable one.

According to sources however, no final agreement has been reached and the size of the stake could change. Reuters is reporting that a separate source said GM would likely purchase a stake of less than 5-percent. Either way, it appears that GM and Paris-based Peugeot are going to be getting in business with one another rather shortly.

[Source: Automotive News]