PSA Peugeot Citroen to raise €1bn

PSA PEUGEOT Citroen, Europe’s second-biggest carmaker, plans to sell shares in a €1 billion capital increase at a 42 per cent discount.

Shareholders, who will have the right to buy 16 shares for every 31 they already own, will pay €8.27 per share, the Paris-based carmaker said in an emailed statement. That compares with a closing price of €14.21 on Monday.

General Motors and Peugeot announced last week an alliance that will include joint purchasing and vehicle development in an effort to revitalise their European operations. GM will buy 7 per cent of the French carmaker.

“This money will be directed to our strategic projects with GM,” said chief financial officer Jean-Baptiste de Chatillon. “The money will allow us to accelerate this strategy.”

Peugeot declined 50 cent, or 3.5 per cent, to €13.71 at the close of Paris trading. The shares have gained 13 per cent this year, valuing the carmaker at €3.21 billion.

“The share price never falls down to the offer price,” said Philippe Houchois, a UBS AG automotive analyst. “In theory, the price should be €12.30, but a lot will happen in the next two weeks. – (Bloomberg)