DETROIT General Motors Co (GM.N) will pay 320 million euros ($423 million) for its 7 percent stake in French automaker Peugeot SA (PEUP.PA) as part of an alliance designed to save the companies at least $2 billion.
GM and Peugeot (PSA) will develop at least four vehicles together by 2016, GM said in a regulatory filing with the U.S. Securities and Exchange Commission on Monday. The term of the pact is 10 years.
The companies said last week that they would form an alliance to pool purchasing, research and development, and to build vehicles on shared platforms to lower costs.
The alliance can end early if one of GM's competitors buys 10 percent or more of Peugeot stock, either directly or indirectly, GM said in the filing.
The deal can end if the Peugeot family's stake falls below 15 percent and a competitor comes to own 5 percent or more of PSA. The alliance can also end if another automaker buys 3 percent of PSA through a deal with PSA or the Peugeot family.
GM and Peugeot will continue to separately market and sell their vehicles.
GM is banking on the deal to help it reverse 12 years of losses in Europe, mainly on its Opel brand. Peugeot, which relies heavily on the European market, hopes to increase sales in other markets.
(Reporting By Deepa Seetharaman)