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PSA Peugeot Citroen raised 1 billion Euros for partnership with GM

By SYF77 on 04 Apr 2012

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PSA Peugeot-Citroen (officially Peugeot S.A.) has succeeded in raising 1 billion Euros via rights issue to strengthen its planned collaboration with General Motors. Chief Executive, Philippe Varin, stated that the capital injection will enable them to finance investments associated with the projects at the “core of the strategic alliance” with GM.

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The stock sale was reserved for the existing stakeholders and was 78% oversubscribed. The issue price was 8.27 euros per share, representing a 42% discount from the closing price of the mother share on the night before the rights announcement.

The companies plan to share vehicle platforms, components and modules as well as creating a global purchasing joint venture that will improve both groups’ leverage in sourcing goods and services from suppliers by commanding $125 billion in purchasing power. GM and PSA are aiming to achieve an annual savings of more than $2 billion from the joint-venture.

“This partnership brings tremendous opportunity for our two companies,” said Dan Akerson, GM chairman and CEO. “The alliance synergies, in addition to our independent plans, position GM for long-term sustainable profitability in Europe.” As part of the agreement, GM acquired 7% stake in PSA Peugeot Citroën for 304 million Euros.

For a start, the alliance will focus on small and midsize cars, MPVs and crossovers. The first model from the collaboration is expected to hit the market in 2016. With more and more mergers and partnership among automakers, I hope that driving experience will not end up like taking a meal in food court chains where there is not much difference in the taste of the food across the outlets.

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SYF77
Written by SYF77
I have been a car fanatic since 1989, when my father was changing our family car then to a Toyota Corolla 1.6 GL fitted with a Twin Cam 16 valve engine that was carburetor-fed, a big deal back in those days. The automobile technology and industry fascinates me and I hope to broadcast these interesting developments to everyone out there through this blog.



 
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