Peugeot in Talks to Buy General Motors' European Operations -- Update

Features Dow Jones Newswires

PARIS--French car maker Peugeot on Tuesday said it was in talks with General Motors over a potential acquisition of its European business Opel.

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The company, officially known as Groupe PSA SA, said it was in talks regarding a number of possible options including a purchase of the unit.

A spokesman for GM said it was in talks about potentially deepening its ties with Peugeot but didn't give details.

"We confirm that we're examining numerous strategic initiatives with GM to improve our profitability and operational efficiency, including a potential acquisition of Opel," a Peugeot spokeswoman said. Shares in Peugeot rose nearly 5%.

She added that the companies already had a number of common projects and regularly examined strategic initiatives that could lead to other synergies. General Motors and Peugeot, which also makes Citro´┐Żn and DS cars, already share production of SUVs in France and Spain. A previous attempt at a broader alliance unwound in 2013 when GM sold its stake in the French car maker

Opel has failed to make money since before 2000, racking up $15 billion in losses over the past decade and a half. GM was close to selling the struggling German unit in 2009 to Canadian auto supplier Magna International Inc., but backed away because of concerns it would be underrepresented in Europe.

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GM has long relied on Opel to design passenger cars, which are more popular in Europe than in the U.S.

The auto maker hit a fresh roadblock in 2016, failing to make money in Europe even after Chief Executive Mary Barra repeatedly committed to breaking even in the region. The company said that $300 million in currency-related headwinds--stemming from Brexit--resulted in losses.

While the losses were narrowed last year from 2015, GM expects more red ink in 2017, even as the Chinese and North American units are solidly profitable. GM Chief Financial Officer Chuck Stevens said last week not to expect a profit until 2018 with Opel.

Write to Nick Kostov at Nick.Kostov@wsj.com and John Stoll at john.stoll@wsj.com