PSA Peugeot Citroen shares rose sharply on Monday on rumours the automaker could sell its Faurecia auto parts maker to reduce debt.
Peugeot shares rose as much as 13 percent after brokerage firm CM-CIC said the carmaker may be forced to sell its 57.4 percent stake in Faurecia to raise between €1.2 billion and €1.5 billion. Faurecia shares were also up 8.1 percent this morning.
PSA Peugeot Citroen and Faurecia declined to comment. So far, Peugeot has sold other assets including its Gefco logistics arm and leased-back its Paris headquarters as the company struggles to cut losses by terminating more than 10,000 jobs in France and by shutting down an assembly plant near Paris.
Speculation about the Faurecia sale pleased investors because a disposal would allow Peugeot to deconsolidate Faurecia’s €1.6 billion debt from its own €2.5 billion total, Credit Suisse analyst Erich Hauser was quoted as saying by Reuters.
However, selling Faurecia could be harmful for Peugeot in the longer run, as the parts business has consistently outperformed its parent. The auto parts maker contributed €1.8 billion in cumulative earnings to Peugeot in 2006-2012, while the core auto division lost €1.2 billion.