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March 2, 2012 5:03 PM

Three Firms Help GM and French Automaker Peugeot Strike Alliance

Posted by Tom Huddleston Jr.

Under an agreement announced Wednesday, General Motors will acquire a 7 percent stake in PSA Peugeot Citroën, and the two companies will work together to develop and build vehicles, and purchase parts from suppliers.

GM will pay roughly $335 million for its piece of Paris-based Peugeot, Europe's second-largest carmaker, The Wall Street Journal reports. The investment would make GM the French company's second-largest shareholder, behind only the Peugeot Family Group. Peugeot also expects to raise about $1.3 billion in a related share sale that is meant to reflect the company's confidence in the new alliance.

The companies expect the joint venture to cut costs by about $2 billion a year within five years. The alliance will focus on small and midsize passenger vehicles, and could include a collaboration on low emission cars, with the first jointly built vehicles expected to appear by 2016, the companies said.

Freshfields Bruckhaus Deringer is advising GM on the tie-up. Corporate partners Andreas Fabritius and Markus Paul, as well as corporate counsel Markus Stephanblome, handled their end of the negotiations from Frankfurt; corporate partners Hervé Pisani and Fabrice Cohen, along with corporate counsel Denis Barat, worked on the deal in Paris. Partners Frank Montag and Bob Schlossberg advised on competition matters from Brussels and Washington, D.C., respectively.

The firm said in a statement that GM's in-house legal department also advised on securities, antitrust, export controls, and purchasing and logistics matters. GM's general counsel is Michael Millikin.

Freshfields also advised GM on its 2000 alliance with Italian automaker Fiat.

U.K. publication Legal Week reports that Bredin Prat is Peugeot's primary adviser on both the alliance and the share sale. Paris-based corporate partners Benjamin Kanovitch and Olivier Saba are leading a group from the firm that also includes corporate partner Kate Romain, employment partner Pascale Lagesse, as well as tax partners Yves Rutschmann and Sébastien de Monés.

Linklaters antitrust partners Anne Wachsmann and Olivier d'Ormesson are advising Peugeot on competition matters from the firm's Paris office. They are collaborating with competition partners Daniela Seeliger, in Düsseldorf; Thomas McGrath, in New York; and Malgorzata Szwaj, in Warsaw.

The Journal notes that GM has not had a major manufacturing alliance in place since its 2009 bankruptcy, and the deal with Peugot should help the Detroit-based automaker cut costs and downsize staff in Europe, where its operations lost $747 million last year.

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