PSA Group, the French manufacturer of Peugeot- and Citroën-brand vehicles, agreed to acquire the Opel and Vauxhall brands from General Motors for $2.3 billion. The deal includes Opel and Vauxhall’s full product lines and production facilities across Europe, as well as Opel’s bank. In acquiring its German rival, PSA propelled itself to the position of Europe’s second-ranked carmaker by sales behind Volkswagen. GM, to its benefit, dispatched of its European arm that has been losing money since the 1990s. However, the merger is not without both microeconomic and macroeconomic concerns.

Although the deal puts PSA in a strong position to challenge Volkswagen, the company must demonstrate post-merger profitability to remain competitive. Both companies have more capacity than necessary, and the Opel brand has not been profitable in recent history. Industry observers have expressed anxiety over potential factory closures and job reductions, but the Chairman of PSA maintained the company would target cost reductions in research and development in order to avoid factory closures. Proposed methods to achieve such cost reductions include redeveloping Opel vehicles with PSA technology and architectures.

Although the French government supports the acquisition, the success of the merger may be subject to the increasingly tense political relations of the companies’ parent countries. Recently, European politicians have demonstrated an increasing awareness of and interest in corporate decision-making as they face a rise of right-wing populism. The automotive industry can be an especially sensitive issue for populist constituents, since job losses or reductions associated with flagging car factories will most heavily impact less-educated, lower-income workers.

France is home to most of the Peugeot and Citroën factories, while Britain and Germany are home to the largest Opel and Vauxhall factories. PSA must balance the needs of elected officials and labor leaders in these countries in order to make the acquisition successful. Britain’s exit from the European Union (“Brexit”) also raises concerns regarding the vulnerability of Vauxhall’s British plants at Ellesmere Port and Luton. If PSA exports cars from Britain to the European continent, the company may find themselves subject to substantial tariffs.

Europe is a challenging market for automobile manufacturers. Customers expect groundbreaking features in small cars that have low profit margins. It remains to be seen whether PSA can leverage its new brand acquisitions to find dominance in the European market, or perhaps growth in the global market that allows reduced reliance on the demanding European market. However, in order to work amicably with European politicians and labor leaders, PSA will be challenged to meet such goals without eliminating jobs.

PSA Group Acquisition of Opel and Vauxhall Brands Faces Economic and Political Challenges (PDF)

Neiman Marcus is said to be in merger talks with Hudson’s Bay Company, the Canadian retail giant. If closed, this deal would put the upscale department store under the same company as Sak’s Fifth Ave, OFF 5TH, and Lord & Taylor.

Neiman Marcus was founded in 1907, and passed through the hands of various families until 2005. In 2005, the Neiman Marcus Group, which also operates the Bergdorf Goodman brand, was subject to a leveraged buyout. Two private equity firms, Texas Pacific Group and Warburg Pincus dropped $1.5 billion into the $5.1 billion leveraged buyout deal. In June of 2013, the two private equity firms sought to exit this transaction and originally tried to conduct an IPO. However, they instead opted for an outright sale because of rising stock values and strong credit markets. It was sold to Ares Management LLC and the Canadian Pension Plan Investment Board for $6 billion.

Since 2013, Neiman Marcus has been struggling as online retailers have gained popularity. Their competition stems largely from off-price stores such as TJ Maxx and online retailers such as Amazon.com. The company filed to go public in 2015, but decided to pull this IPO. As of October 2013, Neiman Marcus had about $4.9 billion in debt and a decrease of 2.9 percent in sales.

Now, there are rumors circulating that Neiman Marcus is considering a merger with Hudson’s Bay Company. If closed, this deal would shift the department store environment because Sak’s Fifth Ave, also owned by Hudson’s Bay Company, is currently one of Neiman Marcus’ biggest competitors. Although it is not a public company, Neiman Marcus has publicly registered debt, which requires it to report certain financial disclosures. In one of those disclosures, Neiman Marcus said that is was evaluating its strategic options and the sale of the company was one of the avenues being explored. However, the financial disclosures listed that it has not set a timetable to evaluate its options.

Hudson’s Bay and Neiman Marcus in Possible Merger Talks (PDF)

If the $31 billion merger of Deutsche Börse and the London Stock Exchange (LSE) collapses, this will be their third failed attempt since 2000. However, if the deal goes through, LSE-Deutsche Börse would be the world’s biggest exchange operator by revenue and second-largest exchange operator by market value.

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