PSA Peugeot Citroen may sell around 7% share in the Paris-based carmaker to General Motors Co. as part of a development alliance, according to Bloomberg citing insiders who have knowledge of the situation. The company may announce the plans for the sale as soon as this week, the insiders disclosed.
The transaction would include a standstill agreement wherein GM would not have a greater holding in the French automaker without permission, according to the insiders who requested anonymity due to the confidentiality of the discussions. They further disclosed that Peugeot may present additional stocks through a rights issue in line with the transaction.
In a different report, Reuters cited sources who stated that GM may purchase a share of no greater than 5%. An alliance of Peugeot and GM may include manufacturing engines and vehicles together in the region, according to an individual who is familiar with the matter. GM spokesperson Klaus-Peter Martin declined to make a comment.
Peugeot spokesperson Jonathan Goodman declined to comment, too. GM is seeking to turn around its Opel brand, which is running at a loss. Meanwhile, Peugeot is looking for ways to stem an increasing debt load. Last year, the European sales of Peugeot dropped by 8.8% to 1.68 million units.
On the other hand, GM's sales declined 1.9% to 1.17 million units. Vehicle executives anticipate deliveries in Europe to drop in 2012, which would be the fifth year that this happened. There was no final agreement reached regarding the alliance, the insider disclosed, adding that the size of the share could change.
Philippe Varin, Peugeot's chief executive office, revealed this month that the company was agreeable to the study of partnerships as long as they are in accordance with the group's strategy. These include the expansion outside the European region as well as contributed synergies while protecting the company's independence.