PSA/Peugeot-Citroen has successfully finalized the capital increase of 1 billion euro to strengthen its planned partnership with General Motors Co., the PSA disclosed. The increase in capital was announced in February. The stock sale was reserved for the current stakeholders. It was 78% oversubscribed according to PSA.
Chief Executive Philippe Varin stated that the sale will enable them to finance investments associated with projects at the "core of the strategic alliance" with GM. On March 6, it was announced that the issue price was 8.27 euros per share. This comprised a 42% discount on the closing price from the previous night.
Shares of PSA dropped by 1.3% to 12.63 euros on Tuesday, before the outcome of the issue was announced. Based on the partnership deal, which was disclosed on February 29, PSA and GM are aiming to achieve more than $2 billion in annual savings from shared logistics and purchasing as well as the joint production and development of automobiles and components.
GM is spending 304 million euros or $403 mln for a 7% share in the French company, making it the second largest stakeholder next to the Peugeot family. After the rights issue settlement on March 29, the Peugeot family will hold 37.9% percent of voting rights and 25.2% percent of PSA's capital, according to PSA.