Join our community of traders FOR FREE!

  • Learn
  • Improve yourself
  • Get Rewards
Learn More

PSA Peugeot Citroen, which is currently the second-largest car manufacturer in Europe, announced that it reached an agreement to bring in Dongfeng Motor Corp. and France as investors as part of a rescue package estimated to 5.27 billion Euro (7.26 billion dollars).

Peugeot SA made an official statement today, saying that the company will ensure its financing by selling new stock and warrants, and starting a partnership with Banco Santander SA. A credit line estimated to 2.7 billion Euro was renewed between the company and some banks. Peugeot also announced that its cash consumption decreased 86% last year to 426 million euros, managing to surpass a goal of reducing the figure by half.

Currently, the company is considered to be one of the car manufacturers that are worst-hit by the shrinking auto market in Europe. In 2013, Peugeot SA posted an operation loss estimated to 177 million Euro, which marks its second consecutive unprofitable year, but was lower than analysts projections for an average loss of 247 million euro.

A total of 800 million Euro will be paid by Dongfeng Motor Corp. and the French state each for a 14% stake apiece. This sum will help raise about the half of a 3-billion-Euro capital increase.

The company explained in its statement, which was cited by Bloomberg: “The strengthening and deepening of the existing industrial and commercial partnership with Dongfeng will capitalize on the group’s current success in the world’s largest automobile market, which is now the primary source of growth for the automotive industry.”

According to the company, such a sale would put the turning point for Peugeot, which has a 118-year-old history. As reported by Bloomberg, this deal is the second attempt of the company in two years time to improve its profit by attracting a long-term strategic investor in order to provide money for vehicle development and expansion of the company in emerging markets. A stake was bought by General Motors Co. in early 2012, but the deal was undone after more than a year and a half as savings from this partnership failed to reach targets.

Peugeot SAs shares rose by 6.12% in Paris by 8:26 GMT to EUR 13.2650, having hit a two-year high of EUR 13.64 per share. Dongfeng fell by 1.1% in Hong Kong to close at HKD 10.84.

TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover Forex, Price Action and Social Trading.

Related News

  • Amazon.com Inc.’s share price down, reveals it is “not optimistic” for the Hachette Book Group disagreement outcomeAmazon.com Inc.’s share price down, reveals it is “not optimistic” for the Hachette Book Group disagreement outcome Amazon.com Inc. made an online post sharing its position for the dispute with publisher Hachette Book Group, saying that it is “not optimistic” that the disagreements will be resolved any time soon. The company said for itself that it is […]
  • Market Briefing on Wednesday June 29thMarket Briefing on Wednesday June 29th Having been contained between the hourly 55-period and the 100-period Exponential Moving Averages in the past several hours of trade, EUR/USD managed to break above the 55-period EMA and, at the start of the US trading session, it tested the […]
  • Forex Market: CAD/CHF daily forecastForex Market: CAD/CHF daily forecast During yesterday’s trading session CAD/CHF traded within the range of 0.8233-0.8256 and closed at 0.8240.At 6:06 GMT today CAD/CHF was gaining 0.16% for the day to trade at 0.8252. The pair touched a daily high at 0.8254 at 6:00 GMT, […]
  • Swiss franc stable against the US dollarSwiss franc stable against the US dollar On Thursday the Swiss franc traded steadily against the US dollar ahead of crucial US data, but gains were capped as uncertainty over the Federal Reserve Banks asset purchases grew, pressuring demand for the dollar.USD/CHF fell to 0.9129 […]
  • Copper falls on slowing growth of Chinese provincesCopper falls on slowing growth of Chinese provinces Copper fell on Tuesday as China reported most of its provinces economic growth during the first half of the year underperformed expectations, spurring concern over faltering demand for the metal in the worlds top consumer.On the Comex […]
  • Forex Market: EUR/GBP daily trading forecastForex Market: EUR/GBP daily trading forecast Yesterday’s trade saw EUR/GBP within the range of 0.7406-0.7448. The daily low has also been the lowest level since January 26th, when a low of 0.7402 was recorded. The pair closed at 0.7421, losing 0.28% on a daily basis.At 7:38 GMT today […]