Peugeot May Sell Gefco Trucking Stake to Russian Railways
PSA Peugeot Citroen (UG), Europe’s second-biggest carmaker, may sell a majority stake in its Gefco trucking unit to OAO Russian Railways after the state-owned company made the highest offer, a union official said.
The Russian company is willing to pay about 1 billion euros ($1.31 billion) for 75 percent of Gefco, two people familiar with the matter said. Peugeot and Russian Railways officials declined to comment.
“Russian Railways is best positioned so far to win the bid,” Christian Lafaye, an FO union official at Peugeot, said in a phone interview. “They would buy a majority stake of Gefco and Peugeot would retain a minority stake.”
Peugeot announced plans in February to sell assets, including a Gefco stake, as the carmaker grapples with European overcapacity and increasing debt. The 116-year-old French manufacturer plans to cut 8,000 jobs and close the Aulnay factory on the outskirts of Paris to reduce costs. It issued 1 billion euros in new shares this year to investors and sold a stake to General Motors Co. (GM) to raise cash.
“In terms of value, this is good news,” said Florent Couvreur, an analyst at CM-CIC Securities with a buy rating on Peugeot. “I had valued Gefco at about 1.4 billion euros so to me this is a fair value. We had heard rumors about private equity funds offering half of the sum.”
Peugeot climbed as much as 43 cents, or 6.5 percent, to 7.13 euros and was up 6.3 percent as of 4:13 p.m. in Paris trading. The stock has dropped 33 percent this year, valuing the French carmaker at 2.53 billion euros.
Russian Railways still needs government approval to make the purchase, said the people, who asked not to be identified discussing private talks. Russian newspaper Kommersant first reported the railway’s 1 billion-euro offer on Aug. 30.
Peugeot was lowered to two levels below investment grade by all three main rating services in July after it reported a 662- million euro first-half loss at its automaking unit. The carmaker said in July it had burned through 200 million euros in cash monthly for the last year.
Gefco, founded in 1949 by Peugeot, reported a 6.7 percent drop in first-half revenue to 1.88 billion euros. The unit’s operating profit in the period dropped 56 percent to 63 million euros. Gefco employs 10,300 people in 32 countries, according to its website.
GM and Peugeot announced an agreement on July 2 to transfer the majority of the Detroit-based company’s logistics business in Europe to Gefco as part of the far-reaching alliance the two reached in February.
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