Home CitroŽnŽt home
Site search powered by FreeFind Do NOT include 'Citroen' in your search terms

PSA Peugeot CitroŽn announces major business and financial projects
for the development and growth of the Group

Paris - 19 February 2014
  • A strengthening of the industrial and commercial partnership with Dongfeng Motor Group

  • €3.0 billion capital increases

  • Free attribution of equity warrants to existing shareholders

  • A capital increase reserved for employees will be offered in 2014, to give them the opportunity to participate in the recovery of the Group

PSA Peugeot CitroŽn announces today major business and financial projects aimed at improving its competitiveness and accelerating its globalisation and emerging markets expansion strategy, while reinforcing its financial strength. They represent a continuation of the measures undertaken as part of the Rebound 2015 plan, the new Social Contract and the “Back in the Race” strategic plan that the Group will present in April 2014.

The operations would consist of:

1. The strengthening and deepening of the existing industrial and commercial partnership with Dongfeng Motor Group (“DFG”), China’s second largest carmaker, in order to capitalise on the Group’s current success in the world’s largest automobile market, which is now the primary source of growth for the automotive industry.

2. €3.0 billion capital increases with a free attribution of equity warrants to existing Peugeot SA shareholders, including:

  • A reserved €1,048 million capital increase to be subscribed by DFG and the French State on an equal basis, at a subscription price of €7.5 per share;

  • €1,950 million rights issue open to all Peugeot SA shareholders (including DFG and the French State), and underwritten by a syndicate of banks for the shares not subscribed by DFG, the French State and FFP/ EPF;

  • Prior to the capital increases, an attribution of free equity warrants to existing Peugeot SA shareholders, with one warrant granted per existing share, based on a subscription ratio of 10 warrants for 3 new PSA Peugeot CitroŽn shares. The warrants could be exercised over three years and would be exercisable from the 2nd year, with a strike price equal to the subscription price of the reserved capital increase in favour of DFG and the French State i.e. €7.5 per share.

3. A capital increase reserved for employees will be offered in the course of 2014, in order to give them the opportunity to participate in the value creation potential of the Group.

These operations, which have been agreed in principle by the parties involved, remain subject to the signature of final documentation, planned at the end of March 2014, and the approval of regulatory bodies, notably in France
and China, as well as the approval of the Extraordinary General Meeting of Peugeot SA shareholders due to take
place in the second quarter of 2014.

These operations are aimed at:

  • Strengthening PSA Peugeot CitroŽn’s footprint in China and in ASEAN and the realisation of industrial
    synergies with DFG, of around €400 million per annum for PSA Peugeot CitroŽn by early 2020s;

  • Reinforcing PSA Peugeot CitroŽn’s competitive positioning in Europe, in particular through:

o Accelerating PSA Peugeot CitroŽn’s development via the financing of a program of strategic investments;

o Strengthening its balance sheet and liquidity, resulting into a strong decrease of financial charges

Group trade unions of the Group are aligned with these projects and the Peugeot SA Work Council, consulted in
this operation issued on February 18 a unanimous approval.

The President of the Supervisory Board said:
"The Supervisory Board has unanimously voted in favor of these major operations that open a new page in the
history of PSA Peugeot CitroŽn. By reinforcing its financial solidity whilst outlining perspectives for an ambitious
international development, these measures will contribute to the long term future of the Group as well as its future
growth which will benefit the Group’s clients, employees, shareholders and all its partners."

1) Accelerating the Group’s international development by strengthening the industrial and commercial partnership with DFG

With nearly 16 million vehicles sold in 2013 and an annual growth of c. 18% between 2013 and 2015, China is the
world’s largest automotive market and the primary source of growth for the automotive industry. Since 2013, it
has been PSA Peugeot CitroŽn’s second largest market, with around 550,000 vehicles sold in 2013 via DPCA, its
50/50 joint-venture with DFG.

DFG is a listed company on the Hong Kong stock exchange and with a market capitalization of c. €9.5 billion, estimated revenues of €17.3 billion and EBITDA of €1.9 billion in 2013 *, is:

  • The country’s second largest automaker, with 3.1 million units sold in 2012;

  • China’s third-ranked car manufacturer, with around 12% market share in 2012, and second-largest commercial vehicle producer, with around 12.5% market share in 2012;

  • A market leader in MPVs, SUVs and mid-sized and heavy commercial vehicles.

Today, DFG and PSA Peugeot CitroŽn are taking their more than 20 year-old partnership to the next level by implementing a major industrial plan, structured around three main axes:

  • A joint commitment to propel DPCA into a new phase of growth, with the objective of tripling its volumes
    to 1.5 million vehicles per annum by early 2020s, thanks to a reinforced product plan underpinned by:

o The licensing of technologies developed by PSA Peugeot CitroŽn ;

* Based on Thomson consensus and CNY/ EUR exchange rate of 8.32 as of 31 December 2013

o The launch of two to three new models a year globally for the three brands (Peugeot, CitroŽn and DPCA’s                 own brand).

  • The creation of a joint R&D centre, dedicated to the development of products and technologies for fast
    growing countries, including China.

o This R&D center will complete PSA Peugeot CitroŽn’s R&D footprint in Europe and Latin America ;

o This agreement will include measures relating to the management of intellectual property, allowing PSA Peugeot CitroŽn to freely pursue the development of cooperation ventures with other carmakers.

  • The creation of a new joint venture to drive the sales of PSA Peugeot CitroŽn and DFG vehicles in the rest of Asia and possibly in other emerging markets. This is aimed at capturing the strong growth opportunities in the ASEAN economies and leveraging the similarities between the model line-ups marketed there and in China.

This broader and deeper partnership represents, under its current form, synergies estimated at around €400 million per year for PSA Peugeot CitroŽn by early 2020s and could later be extended to other areas of collaboration.

The Group has also successfully launched its DS line in China in 2013 through with its partner Chang’an Automobile Group through its JV CAPSA, co-owned 50/50. These agreements have no impact on the DS line development plan in China, which is designed to maximise capacity utilization at the Shenzhen plant in 2018.

Moreover the Alliance with General Motors continues in Europe and is delivering additional growth and synergies estimated at $1.2 billion by 2018, shared equally by the two partners.

2) €3.0 billion capital increases aimed at strengthening the Group’s balance sheet and investment capacity, in order to maintain its technological leadership and accelerate its growth projects outside Europe.

a. €3.0 billion capital increases

Subject to the approval by the extraordinary general meeting of Peugeot SA shareholders to be held in Q2 2014
and to the other conditions detailed above, DFG and the French State would each invest €524 million in a €1,048
million reserved capital increase, at a subscription price of €7.50 per share, and corresponding to the issuance of
around 140 million new ordinary shares. DFG and the French State would each own c. 14% of Peugeot SA’s share capital following the reserved capital increase.

Upon completion of this reserved issue, Peugeot SA would undertake a c. €1,950 million capital increase with pre-emption rights open to all existing shareholders (including DFG and the French State), on the basis of one
right for each PSA Peugeot CitroŽn share.

  • The terms and conditions of the rights issue would be determined by the Chairman of the PSA Peugeot
    CitroŽn Managing Board under an authorisation to be submitted to Peugeot SA shareholders at the
    Annual General Meeting;

  • DFG and the French State would undertake to take up their share of the rights issue, in an amount of €276 million each and would hold a c.14% stake each in Peugeot SA’s share capital following the reserved capital increase;

  • Peugeot family holdings FFP and EPF would also subscribe in the contemplated rights issue to reach the same ownership level in PSA Peugeot CitroŽn as DFG and the French State (i.e. c. 14% each), demonstrating their confidence in the strategic reach of today’s announcements and the related value creation for the Group;

  • The portion of the rights issue not subscribed by DFG, the French State and FFP/EPF, i.e. a maximum amount of c. €1,400 million, would be underwritten by a syndicate of banks.

DFG’s investment through the two successive capital increases, for a total amount of €800 million, would accompany the deepening of this historic industrial partnership. The French State would invest the same amount as DFG. FFP/EPF’s investment should amount to c. €150 million to €250 million, depending on definitive conditions and terms set in the context of the rights issue.

Subject to the approval by the extraordinary general meeting of Peugeot SA shareholders and to the other conditions detailed above, current Peugeot SA shareholders (i.e. not including DFG nor the French State) would receive, ahead of the reserved capital increase and the rights issue, one free equity warrant per share held, enabling them to increase their exposure to the Group’s value creation potential.

1. The exercise of 10 equity warrants would give the right to purchase 3 new shares ;

2. Their exercise price would be €7.5, allowing current shareholders to subscribe to new shares at the
same conditions as the reserved capital increase to DFG and the French State ;

3. Their maturity would be 3 years and the warrants would be exercisable from year-2. They would be
traded on Euronext Paris;

4. Proceeds from a potential exercise would represent an additional c. €770 million in case all equity
warrants are exercised.

b. Efficient and balanced governance

Current dual structure would be maintained, the Management Board is responsible for the definition and the execution of the strategy. Carlos Tavares is to be appointed as Chairman of the Managing Board succeeding Philippe Varin on March, 31st 2014.

Upon completion of the contemplated operations, the governance of the Group would be modified to take into account DFG and the French State as new shareholders.

The Supervisory Board composition of Peugeot SA would be balanced and in compliance with the AFEP-MEDEF code. It would be composed of 6 independent members, 2 representatives of each DFG, the French State and FFP/EPF, and 2 members representing employees and employees shareholders. The Supervisory Board would be chaired by an independent member.

The composition and chairmanship of the various committees would also be modified, with notably the creation of a committee overseeing development in Asia which would be chaired by a member proposed by DFG. The governance committee would be chaired by an independent member, while the audit committee would be chaired by a member proposed by the French State and the strategic committee by a member proposed by FFP/EPF.

DFG, the French State and FFP/EPF would undertake individually not to acquire any shares of Peugeot SA beyond the initial number of shares owned post-contemplated operations.

DFG, the French State and FFP/EPF could sell all or part of their shares freely after a customary lock-up period in-line with market standards in the context of the rights issue.

Double voting rights would be granted to shareholders following a holding period reduced from four years (as
currently provided for by the company by laws) to two years, upon approval of PSA Peugeot CitroŽn extraordinary
general meeting, while FFP/EPF would undertake to neutralize the impact of its double voting rights for a period of two years.

DFG, the French State and FFP/EPF will not act in concert in relation to Peugeot SA.

c. Contemplated capital increase will strengthen PSA Peugeot CitroŽn’s balance sheet and investment capacity in order to implement “Back in the Race” strategic plan

The €3 billion capital increase, together with the renewal of PSA Peugeot CitroŽn’s syndicated credit facility of €2.7 billion, comprising a €2.0 billion five-year tranche, will strengthen the Group’s balance sheet and liquidity position.

These transactions will also enhance PSA Peugeot CitroŽn’s investment capacity, and fund the launch of investments related to its new ę Back in the Race Ľ strategic plan, in order to strengthen its competitiveness in Europe and its globalization strategy:

- Debt reduction

- Cost competitive product portfolio and in depth localization to restore competitiveness in Latin America and Russia

- Technology including the next generation Hydrid Powertrain

- CAPEX in capacities:

o New Social Contract commitment in Europe with €1.5 billion capex expenditures in France

o Extension of competitive manufacturing footprint for selected products and markets.

Calendar 

Dates indicated may change in the future:

End of March

Registration document to be filed


Signature of final documentation

Q2 2014

Approval of regulatory bodies


PSA Peugeot CitroŽn Shareholders’ General Meeting


Processing of Capital Increase and free distribution of warrants


Launch of the rights issue


Implementation of industrial and commercial cooperation with DFG


Morgan Stanley and Rothschild acted as financial advisors to PSA Peugeot CitroŽn for the industrial and commercial partnership with DFG and the €3.0 billion capital increases. Bredin Prat acted as legal advisor to PSA Peugeot CitroŽn for all of these transactions.

Banco Santander, BNP PARIBAS, Citigroup, Crťdit Agricole Corporate and Investment Bank, Deutsche Bank, HSBC, Morgan Stanley, Natixis and Sociťtť Gťnťrale Corporate & Investment Banking are acting as Global Coordinators and Joint Bookrunners on the contemplated rights issue. White & Case LLP acted as legal advisor to the banks syndicate.


Important information

No communication and no information in respect of this transaction may be distributed to the public in any jurisdiction where a registration or approval is required. No steps have been or will be taken in any jurisdiction (other than France) where such steps would be required. The issue, the subscription for or the purchase of Peugeot S.A.’s shares and/or warrants may be subject to specific legal or regulatory restrictions in certain jurisdictions. Peugeot S.A. assumes no responsibility for any violation of any such restrictions by any person.
This announcement is not a prospectus within the meaning of Directive 2003/71/EC of the European Parliament and the Council of November 4th, 2003, as amended, in particular by Directive 2010/73/EU to the extent such Directive has been transposed in the relevant member State of the European Economic Area (together, the “Prospectus Directive”).
No securities offering will be opened to the public in France before the delivery of the visa on a prospectus prepared in compliance with the Prospectus Directive, as approved by the French Autoritť des marchťs financiers.
With respect to the member States of the European Economic Area which have implemented the Prospectus Directive (each, a “relevant member State”), other than France, no action has been undertaken or will be undertaken to make an offer to the public of the securities requiring publication of a prospectus in any relevant member State. As a result, the new shares and/or warrants of Peugeot S.A. may only be offered in relevant member States
(i) to qualified investors, as defined by the Prospectus Directive; or
(ii) in any other circumstances, not requiring Peugeot S.A. to publish a prospectus as provided under Article 3(2) of the Prospectus Directive.

The distribution of this press release is not made, and has not been approved, by an “authorised person” within the meaning of Article 21(1) of the Financial Services and Markets Act 2000. As a consequence, this press release is directed only at persons who
(i) are located outside the United Kingdom,
(ii) have professional experience in matters relating to investments within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005 (as amended),
(iii) are persons falling within Article 49(2)(a) to (d) (high net worth companies, unincorporated associations, etc.) of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005 (as amended) or
(iv) are persons to whom this press release may otherwise lawfully be communicated (all such persons mentioned in paragraphs (i), (ii), (iii) and (iv) collectively being referred to as “Relevant Persons”). The securities are directed only at Relevant Persons and no invitation, offer or agreements to subscribe, purchase or acquire the securities may be proposed or made other than with Relevant Persons. Any person other than a Relevant Person may not act or rely on this document or any provision thereof. This press release is not a prospectus which has been approved by the Financial Conduct Authority or any other United Kingdom regulatory authority within the meaning of Section 85 of the Financial Services and Markets Act 2000.
This press release does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States. Securities may not be offered, subscribed or sold in the United States absent registration under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements thereof. The warrants and the shares of Peugeot S.A. and rights in respect thereof have not been and will not be registered under the U.S. Securities Act and Peugeot S.A. does not intend to make a public offer of its securities in the United States.
The distribution of this document in certain countries may constitute a breach of applicable law. The information contained in this document does not constitute an offer of securities for sale in the United States, Canada, Australia or Japan.
This press release may not be published, forwarded or distributed, directly or indirectly, in the United States (including its territories and dependencies and any state of the United States), Canada, Australia or Japan.


CitroŽnŽt has reproduced this Press release since it is likely to be of interest to CitroŽn enthusiasts.  This is not a legally binding or contractual document.

© 2014 PSA Peugeot CitroŽn