Oh no, Peugeot! Shares Stumble Ahead of Possible Deal
The French car company PSA Peugeot Citroën faced a fresh setback Monday. Shares fell 9.1 percent following a Reuters announcement that the company was to receive a 3 billion euros ($4 billion) influx of capital. According to Automotive News report, this would be the result of China’s Dongfeng Motor Corp. and the French government buying matching stakes in the company.
Stock value would be diluted by the fresh infusion of money, and is behind the drop in shares seen this afternoon. It is the latest in what has been a rocky path for the company. Automotive News also detailed what has been less than smooth sailing between the French car company and General Motors Company (NYSE: GM).
First, GM nixed plans for Peugeot to manufacture a larger car. If Peugeot had attempted to move forward on the project, GM said their Chinese affiliate Shanghai Automotive Industry Corporation (or, SAIC) would have vetoed it. Then in June, the French government sanctioned a restructuring plan for Peugeot, that would have tied it to the Opel division of GM. Again, GM refused, saying that such an alliance could pose problems politically, because the U.S. government maintains a 7.3 percent ownership of GM.