Peugeot boss offering assurance over Vauxhall in talks

The boss of Peugeot (Other OTC: PUGOF - news) has come to Britain to give assurances about the future of Vauxhall, should a deal to buy it go ahead.

Carlos Tavares, chairman of Peugeot's owner PSA, had separate meetings with the leader of the Unite union, Len McCluskey, and Business Secretary Greg Clark

Mr Tavares and Mr McCluskey spoke for nearly an hour, discussing the future of Vauxhall's plants in Luton and Ellesmere Port.

Mr McCluskey emerged from the meeting looking content with progress.

He described it as an "open and relatively positive" discussion and said Mr Tavares "spoke about not being here in order to shut down plants".

Later, after a meeting between the car boss and Mr Clark, the Business Secretary said they had discussed the firm's approach to expand production, rather than close plants.

Mr Clark said: "I was assured that the commitments to the plants would be honoured.

"There was also recognition that members of the Vauxhall pension fund will be no worse off."

Peugeot is in talks with the American company General Motors (NYSE: GM - news) about a deal to buy both Vauxhall and Opel, its much larger sister company, based in Germany.

Vauxhall has around 4,500 workers in the UK, while Opel has around eight times as many employees spread around Europe, sparking concerns that the takeover could see Vauxhall marginalised.

Mr McCluskey suggested he had received assurances about "production commitments" at the two plants, should Peugeot's takeover go ahead.

That could be significant, because Ellesmere Port has previously been given a guarantee to produce the Astra model until 2021, while Luton's production of the Vivaro has been signed off until 2025.

Both assurances were offered by General Motors, but Mr McCluskey said he had been given "assurances about honouring existing agreements".

While Mr McCluskey spoke to waiting reporters both before and after the meeting, Mr Tavares made no comment.

Negotiations between GM and Peugeot are continuing.

It is understood that a price of around $2bn (£1.6bn) has been agreed by the two companies, but that some matters remain unresolved.

Among them is how to deal with the deficit in Vauxhall's pension scheme, which stood at around £1bn two years ago and has not been publicly assessed since.

Sky News understands that a deal, which could create the second biggest auto company in Europe, is still highly likely.

If it does go ahead, it may well be announced to coincide with the Geneva Motor Show, which starts on 6 March.