Peugeot leaves helm on sinking ship open for General Motors’ control, but will they step in?

Peugeot 308

As it currently stands, General Motors owns seven percent of PSA Peugeot Citroen. While that might not seem like much, it’s still enough for the family controlling Peugeot with a 25.4-percent stock holding – worth 38.1-percent of voting rights – to offer the helm of the French automaker to GM.

Peugeot was founded in 1810 as coffee mill manufacturer and has been controlled by the same family since.

In the hypothesized deal, GM would combine its floundering German Opel brand with Peugeot – both of which suffered huge losses during the global downturn.

Should such a merger take place, however, GM would want carte blanche to close down factories and lay off workers presumably in order to balance the books. When Peugeot cut jobs and closed plants last year, French President Francois Hollande condemned the moves, calling them “unacceptable.”

“We don’t have any intention of investing additional funds into PSA at this time,” said GM CEO Dan Akerson, according to a Reuters report.

That said, he’s not exactly ruling it out. “If we see something changes, we’ll evaluate that,” Akerson added.

Why would GM have any interest in Peugeot? It had plans to draw on the Peugeot 208 and Citroen C4 Picasso models for its next-gen subcompact cars. Without those, it could be left without a competitive small car in a few years.

And it’s gets more complicated. The U.S. Treasury still commands 14 percent of GM’s common shares. So if GM jumped in, the government would be party to a French automotive bailout of sorts. GM shareholders already balked at the previous cash infusion to the struggling automaker. In reaction, GM halved the book value of its Peugeot holdings. Imagine the shareholder outrage should GM take a more commanding role in Peugeot.

Although we’re slightly entranced with the idea of an American Peugeot revival, we doubt that would ever happen – unless GM for some bizarre reason took the reigns at Peugeot.