French carmaker PSA - which produces Peugeot, Citroen and DS vehicles - said Monday that it has agreed to take over General Motors' (GM) Opel unit in a transaction valued at 2.2 billion euros (2.3 billion dollars).
PSA will pay 1.3 billion euros for GM's European operation, which produces the brands Opel and British nameplate Vauxhall, and 900 million euros for financing company GM Financial, a joint venture with French bank BNP Paribas.
GM is cutting ties with Opel after 90 years of ownership. The operation missed multiple targets to break even, posting a loss of 241 million euros in 2016. It has caused GM around 9 billion dollars in losses since 2009.
PSA's acquisition of the unit - which, pending regulatory approval, is likely to be completed by the end of the year - will forge Europe's second-largest car manufacturer in a bid to better compete in the region's saturated market.
"We are confident that the Opel/Vauxhall turnaround will significantly accelerate with our support, while respecting the commitments made by GM to the Opel/Vauxhall employees," Carlos Tavares, chairman of PSA's managing board, said in a statement.
"For GM, this represents another major step in the ongoing work that is driving our improved performance and accelerating our momentum," said Mary T Barra, GM chairman and chief executive officer.
It is feared that the transaction will lead to significant job losses in the medium term at Opel, which has 38,000 employees in seven European countries. Its 19,000 German employees are protected from redundancies until the end of 2018.
Trade unions in Britain have raised concerns about the 4,500 employees who manufacture Vauxhall cars there. The Unite union held a meeting at the end of last month with worker representatives from the three Vauxhall sites in Britain.
"This union has been working day and night to defend our plants," Unite leader Len McCluskey said after the meeting.
"I personally have met with the highest levels of both General Motors and Peugeot, and the UK government, to make it abundantly clear that UK jobs, plants and communities will not be sacrificed for any sale," McCluskey said.