Following Thursday’s announcement about the continuation of the alliance with PSA Peugeot-Citroen, General Motors on Friday said it has completed the sale of its entire 7 percent stake in the French carmaker through a private placement to institutional investors. GM received €250 million ($343 million) for the 24,839,429 PSA shares.
GM purchased the stock in March 2012 for €320 million ($439 million), as part of the alliance it formed with PSA Peugeot-Citroen. Since then, the partnership has struggled to meet the original goals, with Peugeot saying yesterday that savings from the cooperation will be 40 percent less than originally planned.
But the biggest factor in GM’s decision to sell its PSA stake is said to be the fact that China’s Dongfeng Motors is nearing a deal to buy 20 percent of the French company. If the deal goes through, GM would avoid conflict with its Chinese partner SAIC Motor, a rival of Dongfeng Motors. General Motors said it will support Peugeot aligning with other automaker as long as their existing partnership continues.
Following the transaction, PSA Peugeot-Citroen shares plunged 12 percent, sparking comments from analysts that the timing was not ideal for the French carmaker. Peugeot shares declined €1.29 to €9.34, the lowest close in Paris trading since July 30. This week alone the stock has dropped 22 percent, with the French carmaker being valued at €3.31 billion ($4.54 billion).
According to a report from Reuters, PSA Peugeot-Citroen has already approved a plan for an alliance with Dongfeng and the French state, with each party to spend €1.5 billion for a 20 percent stake in the carmaker. The transaction would give the Peugeot a much needed cash infusion of €3 billion, but a final deal is not expected until the first quarter next year.
By Dan Mihalascu
PHOTO GALLERY
