Peugeot offers big discount on $1.3 billion share sale
By Leila Abboud and Laurence Frost
PARIS/GENEVA (Reuters) - French carmaker PSA Peugeot Citroen offered its shares at a deep discount on Tuesday in a 1 billion euro ($1.3 billion) rights issue to fund an alliance with General Motors aimed at boosting overseas growth and new model development.
U.S. automaker GM and Peugeot announced an alliance last week to co-operate on developing new cars with the aim of saving $2 billion annually via pooling purchasing and research and development.
The French carmaker hopes the deal will help it step up expansion in lucrative new markets as Europe's car market struggles.
Peugeot said on Tuesday it would offer 16 new shares for every 31 currently held by investors at 8.27 euros apiece, a 42 percent discount to its closing stock price on Monday.
The deal will see GM take a 7 percent stake in Peugeot for 304 million euros, Peugeot said.
GM had previously valued the purchase at approximately 320 million euros, based on earlier market prices.
For the founding Peugeot family, the capital increase will dilute its stake but is seen as the best way to replenish the company's coffers after a tough year that saw it burn through 1.6 billion euros in cash.
The family will contribute 140 million euros to exercise 45 percent of its subscription rights in the issue - less than the 150 million euros and 50 percent uptake announced last week. Continued...