GM boss goes on charm offensive as PSA offers Opel guarantees

General Motors Co Chief Executive Officer Mary Barra embarked on a charm offensive to win German support for a sale of Opel to PSA Group as the French automaker tried to alleviate concerns that a combination would lead to a massive overhaul of the brand.

Barra and GM President Dan Ammann plan to meet with German government officials at some point in the near future, according to a source. She also sent a memo to staff in Germany and the US saying the deal would be good for GM's future growth plans, shareholder value and for the longevity of Opel's German operations, the person said.

For his part, PSA CEO Carlos Tavares is open to maintaining Opel's current management structure and intends to keep the unit as a German company and brand, said a person familiar with Tavares's thinking. GM and Peugeot declined to comment.

"The government has an interest in a successful future for the company and its sites," Steffen Seibert, German Chancellor Angela Merkel's chief spokesman, said in Berlin earlier in the day. "The government will, in light of the talks it's holding with all parties involved, form an opinion."

Merkel's government discussed the sale at its Cabinet meeting on Wednesday in a sign of the high degree of scrutiny the proposal is likely to face at a time of political turmoil in Europe.

The UK is negotiating post-Brexit economic ties with the EU, the French presidential election has been upended by a nationalist groundswell for Marine Le Pen and Merkel's own bid for a fourth term is on the line with a resurgent Social Democratic Party.

At stake are scores of jobs: PSA employs 184,000 workers, while Opel has 34,500 employees, with nearly half of them in Germany.

Growth opportunities

GM is making the case that selling Opel to PSA would position the brand to grow and provide better long-term job security than the status quo, one of the people said. In the memo, which was signed by Barra and Opel Chairman Karl-Thomas Neumann, the two executives said the sale would be better for everyone involved.

"I assume that in discussions with Peugeot the chancellor will insist on the importance of keeping jobs primarily in Germany," Franz Josef Jung, a lawmaker from Merkel's Christian Democrats whose constituency is home to Opel's headquarters, said in an interview. Jung previously under Merkel ran the defense and labor ministries.

A combination would create a manufacturer with about 16 percent of the European car market, pushing past Renault SA to become the region's second-biggest auto group after Volkswagen AG.

Reducing costs without cutting jobs would be difficult because the two carmakers have overlapping product offerings and there is overcapacity in the region.

Opel is set up as a German Aktiengesellschaft, which means labor representatives occupy half the seats on the supervisory board, which hires and fires management and signs off on major strategy decisions. Tavares is intending to keep Opel as a German company, said the person, who asked not to be identified because the deliberations are private.

"Almost all experts say that with this deal now being prepared between the large French, almost state-owned conglomerate and Opel, that especially the German Opel plants may be on the losing side," Rainer Einenkel - former works council chief at Opel's Bochum plant, which was shut down - said on Deutschlandfunk radio. "You have to assume that the German plants are under acute threat."

British union Unite is "disappointed and angry" with how the potential deal emerged, General Secretary Len McCluskey told reporters in London after meeting with the UK authorities. Opel's Vauxhall sister brand, which would be included in the sale, is based in the UK.

"Peugeot will of course have a significant French government involvement, so it's important that our government is involved," and the union won't support the loss of "a single job" as a result of a deal, McCluskey said.