The French government will cut its holdings in Valeo as part of its bid to boost the country's struggling auto industry. According to Bpifrance Participations, it had commenced process of selling around 2 million shares -- equivalent to 2.5 percent of the Valeo capital -- through a private placement.
Bank of America, Merrill Lynch and Credit Agricole CIB are lead managers of the placement. Once the transaction materializes, Bpifrance would only have a 3.3-percent stake in Valeo. "I am grateful to Bpifrance Participations for having taken a stake in our capital at a key moment in Valeo's history, in the midst of the crisis in 2009," Valeo chief executive Jacques Aschenbroich said in a statement.
Using Valeo's market value of EUR8.04 billion ($11.15 billion) at the market close on March 11, 2014, the stake divestment would result to around EUR201 million ($278.72 million) in proceeds. Valeo’s shares have surged more than nine-fold since the end of 2008, as strong auto demand in North American helped the supplier ride offset a six-year slump in Europe.
Bpifrance said the decision was made as Valeo now enjoys a position as a strong player in the global auto industry and had a "strong and stable shareholder base." Despite the sale, Bpifrance's participation in Valeo's board of directors will remain unchanged since the investment fund will still hold over 5 percent of Valeo voting rights, Bpifrance said.