Shareholders reacted skeptically to last week’s announcement that General Motors was in discussions to sell off its money losing European operations anchored by the Opel and Vauxhall brands to the Paris-based PSA Group.
But the weekly financial magazine Barron’s gave the proposed sale of Opel a boost when it said GM’s share could increase in value by as much as 35% if the deal was finalized and GM succeeds in finishing the sale.
If the deal goes through, it could net GM as much as $1 billion in cash, Barron’s says, citing analysts. However, the real value from the sale would come from offloading a money-losing business and refocusing on operations in China, Latin America and North America, it said.
GM’s European operations have consistently lost money for two decades and the company came close to selling he Opel back in the midst of its financial crisis of 2009. GM elected to keep Opel but the losses have continued to mount.
(GM, PSA getting pushback on potential Opel deal. For the story, Click Here.)
Opel was supposed to make a profit in 2016 but instead lost money once again when the British vote to leave the European Union reduced the value of the British pound.
Meanwhile, GM’s has remained stuck in relatively narrow range even though the company committed to a $9 billion share buyback and major investments in new technology a business such as ride-sharing.
(Click Here for details about European auto sales.)
As of last week, the 52-week high for GM shares was $38.38 while the low was $27.34 and some shareholders have begun to grumble about the rather lackluster performance of GM’s stock.
Meanwhile, GM’s proposed sale of Opel has come under intense scrutiny in Germany and Great Britain. In both countries, politicians and under leaders have expressed reservations about the deal, suggesting that it could lead to the elimination of jobs.
(GM considers sale of struggling Opel to France’s PSA. Click Here for the story.)
GM CEO Mary Barra and GM President Dan Ammann visited Germany and Great Britain last week in an effort to allay the concerns about the loss of jobs, which have been sharpened by the populist rhetoric used during the Brexit campaign last year and by U.S. President Donald Trump.
One response to “GM Stock Could Pop on Opel Sale”
How many billions could GM have saved if it sold in 2009. That was one of their worst blunders (after Aztek).