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MarketScreener Homepage  >  Equities  >  Euronext Paris  >  Peugeot SA    UG   FR0000121501

PEUGEOT SA

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Exclusive: Peugeot board approves outline Dongfeng deal - source

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12/11/2013 | 03:33pm EDT
Peugeot employees work on the assembly line at the Dongfeng PSA Peugeot Citroen factory in Wuhan

LONDON (Reuters) - PSA Peugeot Citroen's (>> PEUGEOT) board has approved a plan for an alliance with Dongfeng (>> Dongfeng Motor Group Co. Ltd) in which the Chinese carmaker and the French state would buy large minority stakes at a 40 percent discount to Peugeot's current share price, a source familiar with the matter said.

LONDON (Reuters) - PSA Peugeot Citroen's (>> PEUGEOT) board has approved a plan for an alliance with Dongfeng (>> Dongfeng Motor Group Co. Ltd) in which the Chinese carmaker and the French state would buy large minority stakes at a 40 percent discount to Peugeot's current share price, a source familiar with the matter said.

The board agreed to enter final negotiations on a 3.5 billion euro ($4.8 billion) share issue that would see France and Dongfeng Motor Group take matching 20 percent holdings, the source said on Wednesday, speaking on condition of anonymity.

The capital increase would be priced at below 7 euros per share, and perhaps as low as a 6.85 euro indicative offer from Dongfeng, the source said. Peugeot's shares closed at 11.50 euros on Wednesday.

A spokesman for Peugeot declined to comment on the alliance talks. Dongfeng officials could not be reached after hours in Wuhan, China. The French government also declined to comment.

Peugeot, one of the carmakers worst hit by the European market slump, is cutting jobs and plant capacity to try to halt losses within two years.

Philippe Varin, Peugeot's outgoing chief executive, has said the French carmaker is exploring a deeper relationship with Dongfeng, its existing partner in a Chinese joint venture.

The two companies have been in talks for months to extend cooperation to other Asian countries after a multibillion-euro share issue in which Dongfeng and the French government would acquire significant stakes, sources have said.

The Financial Times reported they plan to transfer some Peugeot technologies to Dongfeng while targeting new markets in southeast Asia.

The hefty discount on the proposed deal, approved by Peugeot's board on Tuesday, reflects worsening conditions and currency headwinds since the company pledged to halve its cash burn to 1.5 billion euros this year, the source said.

Under its outline terms, Dongfeng and the French state would each hold about 20 percent of Peugeot after a reserved share sale to the French state and Dongfeng and accompanying rights issue for existing shareholders.

The founding Peugeot family would lose control as its stake was diluted from 25 percent to 15 percent even after acquiring some new stock in the rights issue, the source said.

The effect would be even more dilutive for 7 percent-shareholder General Motors (>> General Motors Company) or any other existing investors that turn down the chance to buy new shares. Peugeot hopes to conclude the deal in January or February, according to the source.

In a move that may help secure the new funding from Dongfeng, Peugeot last week named former Renault No.2 Carlos Tavares as its next chief executive.

(Reporting by Sophie Sassard; Writing by Laurence Frost; Editing by Alexander Smith and Jane Merriman)

By Sophie Sassard

Stocks mentioned in the article
ChangeLast1st jan.
DONGFENG MOTOR GROUP COMPANY LIMITED -2.56% 4.95 End-of-day quote.-32.47%
GENERAL MOTORS COMPANY 0.53% 29.591 Delayed Quote.-19.56%
LETS HOLDINGS GROUP CO., LTD. -1.54% 10.22 End-of-day quote.69.21%
PEUGEOT SA 1.77% 15.535 Real-time Quote.-28.33%
RENAULT 3.41% 22.165 Real-time Quote.-49.18%
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Financials
Sales 2020 59 706 M 69 657 M 69 657 M
Net income 2020 1 732 M 2 020 M 2 020 M
Net cash 2020 6 186 M 7 217 M 7 217 M
P/E ratio 2020 7,91x
Yield 2020 3,58%
Capitalization 13 693 M 15 997 M 15 975 M
EV / Sales 2020 0,13x
EV / Sales 2021 0,08x
Nbr of Employees 170 000
Free-Float 70,7%
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Income Statement Evolution
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Mean consensus OUTPERFORM
Number of Analysts 17
Average target price 19,59 €
Last Close Price 15,27 €
Spread / Highest target 110%
Spread / Average Target 28,3%
Spread / Lowest Target -39,4%
EPS Revisions
Managers
NameTitle
Carlos Tavares Chairman-Management Board
Louis René Fernand Gallois Chairman-Supervisory Board
Maxime Jean Alfred Picat Senior Vice President & Operational Director
Philippe de Rovira Chief Financial Officer
Carla Gohin Senior VP-Research & Advanced Engineering
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