* GM stake in Peugeot likely less than 5 pct -sources
* Deal could be announced in the next few days -sources
* GM's Opel unit is a key concern from GM investors
* Peugeot seeks access to international markets -sources
By Christian Plumb, Philipp Halstrick and Soyoung Kim
PARIS/FRANKFURT/NEW YORK, Feb 27 General Motors
Co is in advanced discussions to buy a small stake in
French automaker PSA Peugeot Citroen as part of their
proposed strategic alliance in Europe and elsewhere, sources
familiar with the situation said on Monday.
Under the terms being discussed, GM would likely buy a stake
of less than 5 percent in Peugeot, the sources said.
Any purchase by GM would be "purely symbolic" to cement the
commercial alliance, one of the sources said, adding that the
size of the stake would be "in that region." At Peugeot's
current market value of $4.8 billion, a 5 percent stake would be
worth $240 million.
A deal could be announced in the next few days, although
sources warned that an agreement has not been reached and talks
could still fall apart.
A GM spokesman declined to comment. A Peugeot spokesman did
not immediately return calls and messages seeking comment.
GM and Peugeot are discussing a broad strategic alliance
designed to stem losses in Europe and cut production costs
elsewhere, people familiar with the matter said last week.
For GM, an alliance would provide a means to lower operating
costs at its loss-making European unit, Opel, while Peugeot
would gain much-needed access to international markets at a time
when auto sales in Europe are sagging, sources said previously.
Peugeot, which is heavily reliant on the French and European
markets, has been under pressure to find a partner to broaden
its presence around the world and gain access to growth markets
like Latin America, China and Russia.
"The challenge for Peugeot is that it's not in the U.S.
market, one of the world's largest, and its presence in China is
growing but still small. It's too reliant on its home market,
which is shrinking, at least in this economy," said one industry
banker who declined to be identified because he was not
authorized to speak with the media.
But the plan has met with some skepticism in the United
States, with industry experts and analysts saying that for GM,
the potential benefits from such an alliance are less clear.
Peugeot would bring well-regarded diesel engine and small
engine technology to the table, but it is grappling with the
same problems that Opel has and does not help GM outside Europe,
"Frankly we believe it will introduce complications at a
very delicate time in its own restructuring," Guggenheim analyst
Matthew Stover said last week. "In the grand scheme of things,
GM has much more to offer PSA than the other way around."
Sources close to the talks said that while both sides expect
cost savings from sharing vehicle platforms and technology,
Peugeot wants this alliance more than GM does.
Analysts said that an alliance with Peugeot would allow the
companies to pool together resources to develop vehicles but it
could take a decade to fully realize the benefits of the pact.
They also said more steps would be needed to overcome the
core problem for both automakers in Europe: overcapacity.
The European auto market has long been plagued by too much
capacity, cutthroat price competition and paper-thin margins.
Those structural issues have been compounded by the recent debt
crisis, which has hurt consumer confidence and caused many
would-be car buyers to pull back on their spending.
Opel is one of the key concerns for GM investors. In 2009,
the automaker's then-CEO Ed Whitacre scotched a planned sale of
the unit. Last year, GM lost $747 million in Europe and Morgan
Stanley analysts value Opel at negative $8 billion.
GM Vice Chairman Steve Girsky has taken charge of the Opel
restructuring, and GM said this month that it would detail
further steps soon.
Any stake investment in Peugeot would have little impact on
the balance sheet of GM, which ended 2011 with $37.5 billion in