Chinese firm Dongfeng buys Peugeot shares

Chinese firm Dongfeng buys Peugeot shares

Wednesday, May 21, 2014 7:30 pm

French auto group Peugeot Citroen said Wednesday it had successfully completed the final stage of a 3-billion-euro ($4.1-billion) series of capital hikes that also brought in Chinese firm Dongfeng as a shareholder.

The troubled French carmaker said it had raised the intended 1.95 billion euros in the share offer to the public, with demand surpassing 2.8 billion euros.

The public share offering followed one worth just over 1 billion euros in which Chinese auto manufacturer Dongfeng and the French state acquired stakes in Europe’s second-largest carmaker.

A Peugeot car

A Peugeot car

Peugeot chief executive Carlos Tavares said the company “is happy with the success of the operation which lets it go forward with key investments to implement its ‘Bank in the Race’ plan and reinforce its competitiveness in Europe, its technologies and its globalisation strategy.”

The additional funds raised from investors, plus a new 3-billion-euro credit line are aimed at getting Peugeot back into gear after net losses of 7.2 billion euros in the last two years led to its partial bailout by the French state.

The automaker intends to reposition its brands in markets worldwide and notably in Asia, pursue cost cuts and put all its efforts into raising profits and building a money-making culture.

Heavily dependent on European sales, Peugeot was hard hit by the slump in the market as the eurozone struggled through several years of crisis.

The automaker is aiming for growth in China and South-East Asia to change its fortunes, and it is hoped the tie-up with Dongfeng will help it succeed in the region.

Dongfeng, the French state and the Peugeot family each control 14.1 percent of the automaker after the capital increase.

The share offer open to the public was at a considerable discount, priced at 6.77 euros per share.

Peugeot shares slid 0.13 percent to 9.43 euros on Wednesday in a Paris market that rose 0.37 percent.

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