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GM and PSA Peugeot Citroën create global alliance

5 March 2012

General Motors and PSA Peugeot Citroën announced the creation of a long-term global strategic alliance that will “leverage the combined strengths and capabilities of the two companies, contribute to the profitability of both partners and strongly improve their competitiveness in Europe”. The alliance is focused on (1) the sharing of vehicle platforms, components and modules; and (2) the creation of a global purchasing joint venture for the sourcing of commodities, components and other goods and services from suppliers with combined annual purchasing volumes of approximately $125 billion. Each company will continue to market and sell its vehicles independently.

In connection with the alliance, PSA Peugeot Citroën is expected to raise approximately €1 billion through a capital increase with preferential subscription rights for shareholders of PSA Peugeot Citroën, underwritten by a syndicate of banks and including an investment from the Peugeot Family Group, as a sign of its confidence in the success of the alliance. As part of the agreement, GM plans to acquire a 7% equity stake in PSA Peugeot Citroën, making it the second-largest shareholder behind the Peugeot Family Group.

GM and PSA will share selected platforms, modules and components on a worldwide basis as well as for Europe-specific programs. Initially, GM and PSA intend to focus on small and midsize passenger cars, MPVs and crossovers. The companies said they will also consider developing a new common platform for low emission vehicles, with the first vehicle expected to launch by 2016.

Under the purchasing cooperation, the companies will act as one global purchasing organization for sourcing commodities, components and services, taking advantage of the joint expertise, volume, platforms and standardized parts.

The alliance is also exploring cooperation in the area of integrated logistics and transportation. To this end, GM intends to establish a strategic cooperation with Gefco, an integrated logistics services company and subsidiary of PSA Peugeot Citroën, whereby Gefco would provide logistics services to GM in Europe and Russia.

Source: General Motors