GM Alliance Talk Pushes Peugeot Shares Up 9%

PSA Peugeot Citroen, Europe's no. 2 car maker, said it is in talks over potential cooperations and alliances but did not name its possible partners, after media reports said it was in advanced discussions with General Motors.

The media reports, in an online newspaper and the Financial Times, pointed to an alliance beyond a production partnership but not a merger of the companies.

"In the context of its globalization strategy and improving its operational performance, PSA Peugeot Citroen [PEUP.PA  Loading...      ()   ] looks at potential cooperations and alliances," the company said in a brief statement on issued early on Wednesday "Discussions are taking place and there can be no certainty at this stage that these discussions will result in any agreement," it added.

No one at PSA was immediately available for further comment when contacted by Reuters.

French online newspaper LaTribune.fr reported late on Tuesday that PSA was in advanced alliance talks with U.S. peer General Motors, although no agreement had been reached, citing an unnamed source.

"We routinely talk to others in the industry but have no comment beyond that," GM [GM  Loading...      ()   ] spokeswoman Kelly Cusinato said.

LaTribune.fr reported the discussions with GM began several months ago and go beyond specific production partnerships of the kind PSA already has with automakers including Ford [F  Loading...      ()   ] , Toyota and BMW [BMW  Loading...      ()   ] .

Any deal would have to be approved by the Peugeot family, which holds 30.9 percent of the French automaker's share capital and 48.3 percent of voting rights, the report said.

If an agreement is reached, it could be announced at the Geneva motor show in early March, it added. The Financial Times also reported on its website late on Tuesday that the two companies are in advanced talks about an alliance.

The tie-up would see them join forces to build cars and components in Europe, according to two people familiar with the plan.

The partnership, if concluded, would see Peugeot and GM's Opel/Vauxhall unit jointly develop engines, transmission systems and entire vehicles that would be sold under their respective brands.

The alliance would not be a merger and would be unlikely to involve an exchange of shares, the people familiar with the plan told the Financial Times.

PSA and GM's European Opel division both face heavy restructuring to reverse losses that have been compounded by the region's slumping auto market, industrial overcapacity and cut-throat competition on prices.

Copyright 2012 Thomson Reuters. Click for restrictions.

View the original article here