Europe’s second biggest automaker, after finally closing the deal on the stakes sold to both Chinese partner Dongfeng Motor and the French state is further financing its turnaround plan by offering new stock to potential buyers.
The stock is offered at 6.77 euros a share and the carmaker already announced it has buyers that committed to acquire 36% of the available stock in the 1.95 billion-euro ($2.7 billion) rights deal, while separately Dongfeng and the French government acquired around 1.05 billion euros of new stock and will buy more to reach the planned 14% each.
“It’s a lower subscription price than I would have thought,” says Erich Hauser, a London-based automotive analyst at International Strategy & Investment Group. “It could just be that the banks said: ‘I’m not sure if I can sell all the shares at 7.50 but I’m sure I can sell them all at 6.77.’”
This year’s PSA stock gain is currently at 27%, with the carmaker valued at 4.26 billion euros, but the French company went down as much as 9.6% to 11.79 euros in Paris trading this morning.
“They need a lot of money, especially for the new developments in China with Dongfeng,” said Ferdinand Dudenhoeffer, director of the Center for Automotive Research. “If they can make it, it’s a sound road for the future.”
The new CEO, Carlos Tavares, has already set up a recovery plan, officially detailed this month, in which PSA Peugeot Citroen would wind down the existing line-up from 45 to 26 models in the near future, with Citroen’s upscale DS going solo as a brand.