Yesterday shares in PSA Peugeot Citroen fell as much as 10% after a news report emerged – talking about the automaker preparing a 3-billion-euro ($4.1 billion) capital increase in which Chinese partner Dongfeng and the French state would secure big stakes.
According to Reuters, people with knowledge of the matter said a draft agreement, which Peugeot hopes to conclude this year, would envisage state-owned Dongfeng Motor Co Ltd and the French government each contributing 1.5 billion euros to acquire matching stakes of between 20-30%.
Responding to the report, PSA issued a statement reaffirming that it was examining new industrial and commercial projects with different partners, together with the financing that would accompany them.
PSA stock was 10.19% lower at 11.105 euros by 1304 GMT as analysts noted the capital hike would automatically reduce the value of existing shares in the car-maker.
“Depending on terms we would likely regard such a large capital raise as a negative for existing shareholders given the likely dilution,” analysts at Citi Research said in a note.
“There is no great secret, Peugeot is on the look-out for partners,” Finance Minister Pierre Moscovici told a French radio. “PSA’s financial situation is not difficult … the main thing is making sure there is an industrial logic to this.”
French trade unions said they were open to the prospect of the state taking a stake in PSA but the key question was the survival of local jobs and who ultimately secured control of the group.
) - Tuesday, October 15th, 2013 - filed under Citroen
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Discuss: After report of talks with Dongfeng and French government emerges, PSA’s shares slump