GM announced yesterday it is ready to sell its entire 7 % stake in French alliance partner PSA Peugeot Citroen, considering the investment to no longer be necessary.
The company had acquired the stake in Peugeot when it entered into an alliance with the French company in March 2012 and now GM will sell the 24,839,429 shares it owns through a private placement to institutional investors.
“Our equity stake was planned to support PSA in their efforts to raise capital at the time of the creation of the GM and PSA alliance, and that support is no longer needed,” GM Vice Chairman Steve Girsky said in a statement.
Girsky said the alliance would remain in place, with a focus on joint vehicle programs, cross manufacturing, purchasing and logistics. Shares of GM yesterday were up 0.3 % at $40.28 in midday trading on the New York Stock Exchange. The American company also expressed its backing towards the intended PSA alliance with the Dongfeng company from China.
“GM’s exit could make it easier at the end of the day to get a deal with Dongfeng, since GM and Dongfeng are direct competitors in China,” said Erich Hauser, an analyst with International Strategy and Investment Group in London. “But the timing is not ideal for Peugeot and raises questions about the future of their cooperation.”
Meanwhile, PSA Peugeot Citroen plunged as much as 12 % after GM’s announcement. This also comes after PSA said yesterday that savings from the cooperation would be 40 % less than originally planned.
Peugeot declined as much as 1.22 euros to 9.40 euros, the lowest price since Oct. 30, and traded down 9.9 % as of 9:51 a.m. in Paris. The stock has dropped 21 % this week, valuing the French manufacturer at 3.39 billion euros ($4.66 billion).
Via Reuters, Bloomberg