GM selling stake in France's Peugeot

Chris Woodyard and Nathan Bomey, USA TODAY and the Detroit Free Press3:10 p.m. EST December 12, 2013

It's the latest in a series of moves to fix up GM by CEO Dan Akerson


(Photo: SEBASTIEN BOZON AFP/Getty Images)

STORY HIGHLIGHTS

  • GM is selling its 7% stake in the French automaker
  • It's the latest in a series of moves to eliminate the underbrush at GM
  • GM says its role in Peugeot fixed a problem, and now it's time to get out


In the latest in a quick moves by CEO Dan Akerson to streamline America's largest automaker, General Motors said Thursday it's selling its 7% stake in France's PSA Peugeot Citroen.
GM said in a statement it is making the move through a private placement to institutional investors. The shares came about through a strategic alliance last year in an effort to shore up the French automaker Peugeot. A GM official says in a statement that the mission was accomplished.
"Our equity stake was planned to support PSA in their efforts to raise capital at the time of the creation of the GM and PSA alliance, and that support is no longer needed," said GM Vice Chairman Steve Girsky. "The alliance remains strong with our focus on joint vehicle programs, cross manufacturing, purchasing, and logistics. We're making good progress while remaining open to new opportunities."
The move was the latest big one for Akerson. GM recently announced Opel will be its chief brand in Europe after a failed attempt to make Chevrolet its most popular brand there. On Tuesday, Akerson named Executive Vice President Mary Barra to succeed him as CEO. On Wednesday, GM announced it would shut its GM Holden unit's auto plants in Australia, although it will continue to sell cars there.
After GM paid $424 million to acquire its Peugeot stake, it estimated it would save about $2 billion by costs through shared purchasing and joint development of future car models. Today it expects that savings to about $1.2 billion after agreeing to alter the deal.
GM said it would reduce the number of products developed with Peugeot, while each automaker has agreed to manufacture one vehicle for each other by 2016.
It was not immediately clear whether the announcements affect GM's goal of breaking even in Europe by mid-decade. GM has lost money in Europe every year since 1999.
GM spokesman Dave Roman said in an email that the pricing of the Peugeot stock sale would be determined later. In a regulatory filing last year GM said it may have to write down a portion of the investment.
The companies said that a crossover they've co-developed will be produced at Peugeot's Sochaux plant in France. They announced in October that they would produce a multi-purpose vehicle at GM's plant in Zaragoza, Spain.
But they announced today they would no longer partner on development of a subcompact car and engine.
The announcement comes amid reports that Chinese automaker Dongfeng Motor is expected to invest in Peugeot.
GM agreed to relinquish its right to end the partnership with Peugeot "in the event certain parties take a stake in PSA" and that it agreed to support such a deal, according to a statement.
GM last year acquired a 7% stake in the French automaker but GM took an accounting charge after the stake declined in value.
Today, GM and Peugeot said they would continue collaborating on a multipurpose vehicle and crossover. They also said they would start collaborating on a light commercial vehicle, with all three programs based on PSA platforms.
The companies also said they would continue their combined purchasing relationship.

http://www.usatoday.com/story/money/...troen/4001365/