Two people familiar with the matter said that PSA Peugeot Citroen is now absolutely free to concentrate on the reported deal with Dongfeng and the French government after the company reached a deal with unions to slash its operating costs.
Unions, representing more than 60% of workers, said yesterday they’d support a proposal to reduce overtime pay and freeze salaries in exchange for investment guarantees and new models to boost capacity utilization.
Peugeot, which reported a first-half operating loss in its automotive unit of 510 million euros, is looking to raise money for development spending and an expansion outside Europe, where demand is at a two-decade low.
The shares have been pretty volatile in recent weeks due to ongoing rumors regarding government participation,” said Sascha Gommel, a Frankfurt-based analyst at Commerzbank AG who recommends selling the stock. “It would be clearly negative if the French government is getting involved because it would dilute the restructuring measures as the government wants to protect jobs in France.”
Peugeot dropped 2.5% to close at 10.54 euros in Paris trading yesterday. The stock has climbed 93% this year, valuing the Paris-based automaker at 3.74 billion euros.
Four of the six main unions, the CFE-CGC, SIA, CFTC and FO, have told Bloomberg they will support the effort to cut labor costs. The CFDT hasn’t made a decision, while the CGT said it wouldn’t back the plan.
) - Tuesday, October 22nd, 2013 - filed under Citroen
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