Paris — For the French state, the question is not whether it will sell its stake in PSA Peugeot Citroen, but when.
Nearly 24 months after France bailed out Peugeot jointly with China’s Dongfeng Motor, the state was ready to dispose of its stake in the car maker, a person familiar with the matter said.
The company’s full-year results, scheduled to be released on February 24, would provide a gauge for the state to determine the extent of the company’s turnaround and help it decide on a possible exit, the person said.
While the state will pocket a profit of about €600m if it sells the stake now, it may have missed an opportunity to make a great deal more by not selling the shares in May last year, when the stock hit an almost four-year high. Since then, the industry emissions scandal and tumbling global markets have pulled down vehicle stocks. Peugeot shares have sunk 35% since May 27.
“The timing to sell Peugeot shares is plain negative,” said Saxo Bank trader Andrea Tueni. “Selling at these levels doesn’t make sense at all.”
Peugeot, which posted three consecutive years of losses, is expected to report a profit of €1.03bn for last year, according to the mean of 14 estimates collected by Bloomberg. Global sales rose 1.2% last year, led by a 5.9% gain in Europe.
“The state helped the company rebound magnificently,” Louis Gallois, Peugeot’s chairman, said earlier this month.
That has not prevented a slide in Peugeot shares. The tumble since the end of May has shrunk the value of the state’s stake by about €768m, according to Bloomberg calculations. The state bought the shares for €800m and the stake is valued at about €1.45bn at its current market price.
Peugeot was rescued in February 2014, when the French state and Chinese partner Dongfeng announced the purchase of 14% each. The Peugeot family owns another 14%.An exit by the state might remove a roadblock to a partnership with an industrial group for the French car maker, including a greater participation by Dongfeng.
Details of a potential disposal of the French state’s stake — the timetable and the size of the sale — had not been outlined yet, the person familiar with the matter said. Economy Minister Emmanuel Macron’s office declined to comment.
“The state would be interested in selling its stake only if it can find a new shareholder that can invest in the company,” said Bertrand Rakoto, an automotive industry analyst at Paris-based D3 Intelligence. “The car maker needs financing for development. The restructuring is done; now (Peugeot) needs to think of its future.”
While external elements would continue to weigh on the company’s shares, the state might see an exit window opening up later in the year, Mr Rakoto said.
Bloomberg
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