Peugeot in talks to buy GM's Opel

Peugeot is in talks with General Motors about acquiring its European Opel business.

"PSA confirms that it is exploring a number of strategic initiatives with GM with the aim of increasing its profitability and operating efficiency, including a potential acquisition of Opel," a company spokesperson said.

The spokesperson said talks were at an advanced stage but nothing has been agreed.

General Motors and Peugeot – in which the French government holds a 14% stake – already share production of SUVs in France and Spain. In December 2013, GM sold its 7% stake in PSA for £250m after the companies’ plans to make cost savings by working together on several projects failed to bear any fruit.

Any deal would include Opel's UK affiliate Vauxhall and a combination between the two would create a manufacturer with around 16% of the European market.

At 1300 GMT, Peugeot shares were up 3.7% to €18.60 while GM shares were up 3.9% in pre-market trade to $36.91.