Struggling French automaker PSA Peugeot Citroen and U.S. giant General Motors unveiled on Wednesday a strategic alliance that would see GM take a 7 per cent stake in its new partner.
The two companies, who did not reveal whether the deal would lead to job cuts, said the tie-up was a limited one.
“This is an alliance, not a merger,'' GM Chairman and CEO Dan Akerson told a conference call. The two companies said they were creating “a long-term and broad-scale global strategic alliance that will leverage the combined strengths and capabilities of the two companies.''
The agreement, they said in a joint statement, would “contribute to the profitability of both partners and strongly improves their competitiveness in Europe.''
GM and Peugeot are to focus on sharing vehicle platforms, components and modules and on creating a global purchasing joint venture for sourcing commodities and other goods and services from suppliers.
As part of the deal, the French firm is to raise about one billion euro ($1.3 billion) through a share sale which will also include an investment from the Peugeot Family Group, the statement says.
“As part of the agreement, which includes no specific provision regarding the governance of PSA Peugeot Citroen, GM plans to acquire a 7 per cent equity stake in PSA Peugeot Citroen, making it the second largest shareholder,'' it adds.
The Peugeot family said in a statement that it was “firmly convinced of the strategic rationale'' of the deal and would buy 150-million euro worth of the new shares.
Cost savings expected from the deal were estimated at about $2 billion annually within about five years, shared evenly between the two companies.