Peugeot and Citroen owner PSA agrees €2.2bn deal to buy European operations of Vauxhall owner

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PSA, the firm that owns Peugeot and Citroen, has agreed a deal to buy rival the European operations of Vauxhall's European parent General Motors.

A press conference has been scheduled in Paris today with more details on the merger valued at €2.2bn (£1.9bn) to be revealed.

Read more: PSA will honour commitments to Vauxhall plants says business secretary

The combined firm generated €71bn of revenue and delivered 4.3m vehicles last year and will overtake Renault-Nissan as Europe's second largest carmaker, though still considerably smaller than German rival Volkswagen.

“We are proud to join forces with Opel/Vauxhall and are deeply committed to continuing to develop this great company and accelerating its turnaround,” said Carlos Tavares, chairman of the managing board of PSA.

We respect all that Opel/Vauxhall’s talented people have achieved as well as the company’s fine brands and strong heritage.

We intend to manage PSA and Opel/Vauxhall capitalising on their respective brand identities.

Having already created together winning products for the European market, we know that Opel/Vauxhall is the right partner. We see this as a natural extension of our relationship and are eager to take it to the next level.

Read more: PSA profit surges as it gears up for takeover of GM's Opel

Annual synergies of €1.7bn are expected by 2026 – a significant amount of which is expected to be delivered by 2020, which PSA expects to accelerate the business' turnaround.

“For GM, this represents another major step in the ongoing work that is driving our improved performance and accelerating our momentum," said Mary Barra, GM chairman and chief executive. "We are reshaping our company and delivering consistent, record results for our owners through disciplined capital allocation to our higher-return investments in our core automotive business and in new technologies that are enabling us to lead the future of personal mobility."

Concern remains as to the future of Vauxhall's UK factories, which employ 4,500 people, and whether the merger will lead to job losses.

Tavares told a press conference in Paris that "shutting down plants is rather simplistic" and workers would get a chance to show what they can do. He said the firm needed to "trust the talent of the people", though hasn't been drawn on more detail yet.

Another question had been around the pensions of Vauxhall and Opel workers. The companies said all of Opel/Vauxhall's European and UK pension plans, funded and unfunded, will remain with GM. That's except for the German Actives Plan and some "selected smaller plans".

GM will pay €3bn for full settlement of those transferred schemes.

Business secretary Greg Clark said: "Vauxhall has a long history of success in this country and we are determined to see that continue. The government welcomes the assurance by PSA that they will respect the commitments made by GM to Vauxhall's employees and pensioners. We will continue to engage and work with PSA in the weeks and months ahead to ensure these assurances are kept and will build on the success of both sites for the long term."

"The Prime Minister and I have been in close contact with the PSA Group and General Motors and they have been clear this deal is an opportunity to grow the Vauxhall brand, building on their existing strengths and commitments."