General Motors Corp. finally decided to let go of the majority of its European operations with agreement to sell its European Opel and Vauxhall brands. General Motors will be getting approximately $2.33 billion in purchase price for both brands, according to a report on Yahoo! Finance.
The U.S. automaker had been looking into exiting unprofitable markets to focus its investments on future technology like the development of electronic cars and ridesharing service. Jobs & Hire previously reported that General Motors wanted to exit Europe, and the sale of Opel and Vauxhall will complete that goal.
The United Kingdom's decision to exit the European Union had a big impact on General Motors' decision. The U.S. carmaker said it will be more challenging to operate in Europe after the United Kingdom leaves the European Union.
PSA Group, the French-based parent company of Peugeot and Citroen, is eager to add the Opel and Vauxhall brands to the list of companies that it owns. The acquisition is expected to boost the size and scale of PSA Group in Europe.
Fortune reported that the shareholders of General Motors do not seem to welcome the sale, while shareholders of PSA Group were happy with the announcement. Shares of General Motors fell right after it announced that it is selling Opel and Vauxhall. On the other hand, PSA Group's shares rose.
According to reports, General Motors basically is paying PSA Group to take Opel and Vauxhall out of its hands. The press release announcing the deal reveals that General Motors will incur a primarily non-cash special charge of $4.0 billion to $4.5 billion in connection with the deal.
Aside from Brexit, stricter European clean-air regulations also pushed General Motors out of the market. The regulation is expected to lead to higher expenses as it would mean additional expenditures on new technology and equipment.