PSA Group's proposed acquisition of Opel would swiftly create savings and value from the General Motors European division's turnaround and complementary brands. That's the view of the French carmaker's Chief Executive Carlos Tavares who spoke after PSA announced its first dividend in six years and raised its medium-term profitability goal after full-year profit almost doubled.
The timing couldn't have been better. PSA no doubt hoping a record 2016 will impress as it seeks to buy GM's European operations. The maker of Peugeot and Citroen cars lifted automotive operating margins to 6 percent from 5 the previous year. It'll pay its first dividend in six years and has raised its medium-term profitability goal to around 4.5 percent. (SOUNDBITE) (English) PSA GROUP CHAIRMAN OF MANAGING BOARD, CARLOS TAVARES, SAYING: "What we see today in the situation of Opel is something that has a lot of similarities with the situation that we were faced with four years ago." Strong pricing, sales of higher spec models and cost cuts have all helped Peugeot. It's offering to work some that magic onto a struggling Opel. (SOUNDBITE) (English) PSA GROUP, CHIEF EXECUTIVE, CARLOS TAVARES, SAYING: "This company - I'm talking about Opel - has been making red ink for 10 years and approximately burning one billion euros of cash every year. We believe that there is opportunity to create a European car champion." Sources say PSA expects the deal to lead to combined sales of 5 million vehicles in 2020-22. And achieve savings of up to 2 billion euros. (SOUNDBITE) (English): WILSON KING INVESTMENT MANAGEMENT, HEAD OF RESEARCH, RICHARD HUNTER, SAYING: "Because of the political ramifications with GM and especially Vauxhall there's no certainty of a deal. But by the same token one would expect to hear something within the next week or so, Peugeot certainly seems to be now in a position to afford the deal." PSA still has to convince politicians and unions in Britain and Germany that no jobs will be lost. It's made promises to protect factories but some fear the supply chains could suffer.