GM Opel/PSA Group: rival bid would see hurdles, bankers say
- Public negotiation tough given job issues
- Past bidder Fiat Chrysler not ruled out
Potential rival bidders in PSA Group’s [EPA:UG] offer to acquire General Motors' [NYSE:GM] Opel would face difficulties publicly navigating a politically sensitive deal exposed to potential job losses, said two sector bankers.
Strategic shifts for potential rivals like Magna International [TSE:MG] have also made an acquisition less compelling than in the past, they and a third banker said, though some suitors could still have a rationale in a deal.
Earlier this week, the carmakers confirmed reports that they were exploring a strategic review that includes a potential disposition of Opel to Paris-based PSA Group. Analyst reports have valued Opel near EUR 2.6bn, though this news service previously reported the deal price could be influenced by the value of potential R&D, scale, and licensing benefits.
The proposed deal has already drawn political attention as the German and UK government showed concerns on whether the acquisition could lead to the closing of factories and job cuts. PSA has pledged to maintain Opel's independence and continue to invest in all its German sites until at least 2020, according to press reports. PSA CEO Carlos Tavares is also to meet British Prime Minister Theresa May to discuss his company’s acquisitions, which would include two factories ran in the UK by GM under the brand Vauxhall.
Rival bidders might be hesitant to make a bid given the political uncertainty around employees and factories in the UK and Germany, the first banker argued.
Opel has previously attracted takeover interest. In 2009, Italy-based Fiat—years before it became Fiat Chrysler [NYSE:FCAU]—took a look at Opel, as did Canada-based Magna , according to news reports. The first banker also noted that Chinese strategics and sponsors have pursued Opel in the past.
The bankers were split on the chances that either Magna or Fiat Chrysler would enter the bidding fray for Opel at this stage.
Magna initially expressed interest in Opel when it was attempting to develop into a carmaker, the first and third bankers said, but the company has since transitioned into a supplier. A second Magna approach could also be less likely without a partner, the first banker added. Sberbank partnered with Magna in its 2009 bid.
Still, the second and third bankers said they couldn’t rule out Magna as a rival given its previous expression of interest.
Magna did not return requests for comment.
Fiat Chrysler drew similarly mixed speculation. GM wouldn’t likely sell Opel to Fiat Chrysler as it would make the acquiring company, which is already a big competitor in the US, stronger in Europe, the third banker said. In May 2015, Opel chief Karl-Thomas Neumann publicly discounted another proposition from Fiat to combine with Opel, declining to elaborate.
Fiat did not return phone calls seeking comment, while GM declined to comment.
A fourth, US-based banker said that a rival bid is unlikely as the process is a negotiated sale, not an auction.
A PSA-Opel matchup would give PSA scale and also leave Opel with a more logical owner, as GM has always been much more US-oriented, said the first banker. PSA needs a stronger platform to develop further into the electric and autonomous car trends, as well to compete with Korean and Japanese automakers, this news service previously reported.