PARIS (Reuters) — Shares in French
carmaker PSA Peugeot Citroen <PEUP.PA> fell a further 11.6 percent
on Friday, making for a 23 percent fall in just four days, after
U.S. alliance partner General Motors <GM.N> sold its stake ahead of
a possible new share issue by the struggling French carmaker.
The 7 percent stake, totaling 24.84 million shares, was sold at 10
euros apiece in a private placing with institutional investors,
traders said, at the bottom of a range of 10-10.25 euros and at a
5.9 percent discount to Thursday's closing price.
Peugeot shares had lost 7.6 percent on Thursday after the company
unveiled a 1.1 billion-euro writedown at its ailing overseas
operations and confirmed it was pursuing a tie-up with China's
Dongfeng Motor Group <0489.HK> which would be underpinned by a share
issue.
The stock was trading at 9.59 euros by 4.40 a.m. EST, valuing
Peugeot at 3.4 billion euros ($4.68 billion), a loss of 940 million
euros since Monday's close.
Goldman Sachs analysts removed Peugeot from their pan-Europe
"conviction buy list" on Friday, citing "increased dilution risk".
The broker kept its "buy" rating but cut its target price to 12.1
euros from 16.4.
Peugeot said on Thursday that discussions with Dongfeng were at a
"preliminary stage", with no guarantee they would conclude
successfully.
But a source familiar with the matter said the carmaker's board
agreed on Tuesday to enter final negotiations on an outline deal
that would see the French state and Dongfeng take matching 20
percent stakes in Peugeot with a share issue to be priced at below 7
euros a share.
Asked on Friday if the French state would take part in the potential
capital increase, Industry Minister Arnaud Montebourg told RMC
radio: "I cannot answer your question. Will the question arise?
Without doubt. But for now, let the companies discuss between
themselves."
RED LINE
He said the government had the ability to sell state holdings in
certain companies and invest in others, without being specific.
However, he added: "The red line is that PSA will remain French.
That is our position."
General Motors said on Thursday that it would not stand in the way
of a deal between Peugeot and Dongfeng, although the U.S. carmaker
also said its industrial cooperation with the French group remained
strong.
"GM's decision is maybe not so bad insofar as it simplifies the
shareholder structure and could facilitate the partnership with
Dongfeng," Aurel-BGC analysts said. "Furthermore, GM doubtless
didn't want to be massively diluted."
One of the worst casualties of Europe's economic slump and six-year
car sales decline, Peugeot is cutting jobs and plant capacity in an
attempt to halt losses within two years.
Peugeot and GM lowered savings goals for their reduced alliance on
Thursday, but said joint development of compact and small minivans
would continue, and that a delivery van program was also being
considered.
GM also waived its right to withdraw cooperation in the event of a
Peugeot stake sale to a third party, clearing the way for Dongfeng.
Goldman Sachs acted as bookrunner for the Peugeot share placement.
(Additional reporting by Raoul Sachs;
editing by Greg Mahlich)
