More Mergers In Motors? Reuters Reports General Motors Opel Unit And PSA Group In Talks

M&A chatter helped boost automakers' stocks higher on Tuesday.

According to a Reuters report, France-based PSA Group is in talks with the American automaker General Motors Company GM to acquire its European Opel division.

A spokesperson for PSA Group confirmed the talks with Reuters and said it is "exploring a number of strategic initiatives" with the Detroit automaker. The acquisition would fit in with its objective of increasing its profitability and operating efficiency.

Prior chatter suggested that General Motors and PSA Group were in talks to combine PSA with the Opel business. The two companies already share production facilities, which makes SUVs and commercial vans.

Related Link: The Auto ETF Is Driving Smoothly, But Concerns Linger

Reuters noted that a combination of PSA and Opel would create an entity with a 16.3 percent share of the European auto market. This would however fall short of Volkswagen's market share of 24.1 percent.

General Motors' Investors Optimistic

Shares of General Motors gained more than 3 percent on Tuesday as investors appear to be optimistic on the deal as the company has consistently struggled to achieve a profit in its European unit.

Rival automaker Ford Motor Company F also moved higher by around 0.30 percent on Tuesday.

"If I were $GM, I'd pay 'em to take it. Because I am TIRED of the asterisk!!" - @jimcramer, on Opel/Vauxhall, and how they drag Europe ops

— Carl Quintanilla (@carlquintanilla) February 14, 2017

On the other hand, giving up Opel does imply General Motors would forego the global sales volume race. Nevertheless, General Motors is likely to maintain an ownership stake in the new company although it is not clear how big it might be.

At Last Check

• Shares of Ford were up 0.28 percent at $12.59.
• Shares of General Motors were up 3.39 percent at $36.72.