The Peugeot family will give up one-fifth of its voting stake in Peugeot Citroen to fund the French carmaker’s alliance with General Motors, but it will still remain the company’s largest shareholder.
That’s according to a statement issued on 6 March by the Paris-based group, which gave details of the agreement with GM.
In the statement, Peugeot, headed by family member Thierry Peugeot, said it wants to raise €1 billion by issuing new shares between 8 and 21 March.
The company’s current investors will have the right to buy 16 shares for every 31 they already own.
However, the founding Peugeot family will only acquire 14.05% of these new shares – fewer than a half of what it is entitled to. Its remaining entitlement will be used by the US automaker, which will acquire 16.92% of the new capital for €304 million.
As a result of the capital increase, the family will see its stake reduced to 25.2% of the group’s equity and 37.9% of the voting rights.
The Peugeots currently control 30.9% of the capital and 48% of the voting rights, a spokeswoman for Peugeot told CampdenFB on 29 February, although according to the statement the family owns 31.03% of the equity and 48.36% of the voting rights.
It controls the firm, which is Europe’s second-largest carmaker by volume with 3.5 million vehicles sold in 2011, through holding companies Societe Fonciere Financiere et de Participations and Etablissements Peugeot Freres.
Despite the ownership reduction, the Peugeots will remain the company’s largest shareholder, while GM will be the second-biggest investor, controlling a 7% equity stake and about 6% of the voting rights.
The alliance between the two automakers, which was signed last week, will see them share vehicle infrastructure and components to reduce costs.
It comes after Peugeot, which traces its roots to a small bicycles and tricycles business founded by Armand Peugeot at the end of the 19th century, reported a huge drop in profits for 2011 – net profit fell by almost 50% to €588 million.