Peugeot Jumps on Speculation of Faurecia Unit Stake Sale
PSA Peugeot Citroen (UG) climbed to the highest price in more than three months on speculation that the cash-strapped carmaker may seek to raise money by selling a stake in parts maker Faurecia, which also advanced.
Peugeot jumped as much as 11 percent to 6.83 euros, the highest price since Sept. 20, and was trading up 6.2 percent as 12:51 p.m. in Paris. Faurecia, which is 57 percent-owned by Peugeot, surged as much as 13 percent to 14.31 euros and was up 7.9 percent.
“PSA’s persistent problems and inability to find fast and durable solutions mean that it is increasingly likely to sell off more assets,” Florent Couvreur, a Paris-based analyst with CM-CIC Securities, said today in a note to clients. “We therefore believe that the stake held in Faurecia (EO) could be the next disposal on the list.”
Jean-Baptiste Mounier, a spokesman for Peugeot, declined to comment on the company’s plans for its holding in Faurecia.
Peugeot, Europe’s second-largest carmaker, last month reached an 11.5 billion-euro ($15 billion) refinancing agreement for its banking unit as part of a broader effort to shore up the manufacturer’s finances. The French automaker said in July that it was burning through cash at a rate of 200 million euros a month as the European auto market headed for the worst sales in almost two decades.
The gains in Peugeot shares are also tied to purchases by investors who bet that the company’s shares would fall, analysts said. Peugeot’s short interest stood at 17 percent, the highest in the 14-member Stoxx 600 autos and parts index. French competitor Renault SA (RNO)’s short interest was 1.4 percent, according to data from Markit.
Adding today’s move to gains from Jan. 4, Peugeot has surged as much as 21 percent, the biggest two-day gain since April 3, 2009, according to data compiled by Bloomberg.
“There are some who are wondering if Peugeot would sell part of Faurecia to boost its cash,” Yves Marcais, an equity sales trader at Global Equities in Paris. With the prospect of a cash influx, “those who are short the stock don’t want to remain short very long, so are buying back shares.”
As demand for mass-market cars in Europe slump because of the debt crisis, Peugeot has suffered more than most competitors because it lacks a sizable presence in growing economies. The company granted the French state and its labor unions each a seat on its supervisory board. The oversight plans were part of a deal for the government to guarantee as much as 7 billion euros in new bonds for its banking unit, which provides loans to dealers and car buyers.
As part of an effort to boost its finances, Peugeot has also sold assets including its Citer vehicle-rental unit and a majority holding in its Gefco trucking division. The company also agreed to procure parts and develop vehicles with General Motors Co. (GM) to reduce costs. More moves may be needed.
Peugeot will have to “go further” on measures to safeguard its future, French Finance Minister Pierre Moscovici said in a radio interview yesterday on France Inter.
“There is room for this group on the European and world landscape,” said Moscovici. “We will be there to accompany them.”
To contact the reporter on this story: Mathieu Rosemain in Paris at email@example.com