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EU approves sale of Opel to PSA Group

The PSA group has secured EU antitrust approval to acquire General Motors’ European division Opel and Vauxhall.

The European Commission concluded the deal did not pose any competition concern, Reuters reports.

PSA strategy director Patrice Lucas described the decision as “an important step” and said that the companies’ teams are now concentrating on fulfilling other conditions necessary to close the deal, expected before the end of the year.

The terms of sale between GM and the PSA Group, which manufactures Citroën, Peugeot and DS-branded vehicles, were finalised on March 7 after weeks of negotiations.

The European company was valued at $3.4 billion, and the acquisition of Opel/Vauxhall gives PSA a 17 per cent share of the auto industry in Europe.

The merger means research and development and manufacturing costs will be slashed for the struggling German car maker, and PSA expects the Opel/Vauxhall division will reach a two per cent operating margin by 2020.

The Holden brand, also owned by GM, was not part of the sale. PSA has said the existing supply agreements between the Australian marque and Opel, who manufactures the Holden Astra and will begin manufacturing the Commodore from early 2018, will continue.

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FCA merger snubbed by GM, VW

Fiat Chrysler CEO Sergio Marchionne’s attempts to discuss a merger with larger car makers have been rebuffed by both VW and GM in the wake of PSA’s acquisition of Opel.

On Tuesday, Marchionne said the sale would create pressure on VW, which could prompt the German car maker to sit down with Fiat Chrysler.

VW CEO Matthias Mueller dismissed the claim at the Geneva Auto Show, telling Reuters that the company was too busy with the fallout of the emissions scandal. “We’re not ready for talks about anything,” Mueller said. “We have other problems.”

The German inquiry into the VW emissions scandal is in its final days, with German chancellor Angela Merkel set to testify amid controversy over her close relationship with former CEO Martin Winterkorn and ongoing friction with US environmental authorities.

Marchionne has been a long-term advocate for mergers between car makers, which would share the costs of research and development in the effort to produce cleaner, more technologically advanced vehicles.

“You need to achieve scale or we will end up delivering an incredibly poor return and margins on this business. We need to fix this,” he said.

Mueller’s rejection of a merger follows a similar dismissal from GM, after Marchionne said the American car maker was his preferred choice.

“We weren’t interested before, and we’re even less interested now,” GM President Dan Ammann told reporters in Geneva.

Fiat Chrysler lags behind other car makers in Europe, with a market share of seven per cent and an operating margin of 2.5, below most of its rivals.

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