$1.3B to be Raised by PSA Peugeot Citroen for GM Deal image

PSA Peugeot Citroen decided to fund its tie-up with GM by closing a deal to raise roughly $1.3 billion by issuing new shares.

The partnership is meant to help the two companies with their struggle in the competitive and oversupplied European car market. PSA Peugeot Citroen and GM share vehicle platforms and pool the purchasing of components and services to save money, expecting to save $2 billion a year within five years, benefits which will be split equally. The biggest shareholder

On February 28th the two companies closed a deal sharing plans to further their interests in Europe.

“This partnership brings tremendous opportunity for our two companies,” said Dan Akerson, GM chairman and CEO. “The alliance synergies, in addition to our independent plans, position GM for long-term sustainable profitability in Europe.”

GM and PSA Peugeot Citroen share components, modules and platforms to create a global purchasing joint venture, in order to improve both groups’ leverage in sourcing goods and services from suppliers by commanding $125 billion in purchasing power.

GM is on its way to become Peugeot’s second-biggest shareholder with 7% stake in the company, the biggest shareholder being the Peugeot family.