Peugeot shares plummet after GM exit

PHOTO: Peugeot shares plummet after GM exit

PARIS - Shares in French auto company Peugeot plummeted on Friday after auto giant GM said it was selling it's stake amid talk of a huge capital shake-up that could bring in the French state.

In early trading, shares in PSA Peugeot Citroen sank 9.78 per cent to 9.59 euros after already plunging 7.6 per cent on Thursday.

That dive came after loss-making Peugeot confirmed it is in talks with China's state-owned Dongfeng about a shareholder tie-up.

Later Detroit-based GM announced it was dropping its 7-per cent stake in the loss-making French carmaker.

GM explained the move by saying its equity support was no longer needed, in a further indication that big changes are afoot at Peugeot.

Europe's second biggest carmaker after Volkswagen, Peugeot has always been dominated by the Peugeot family, but reports say the family is on the retreat after years of huge losses and poor strategy.

"The question" of an eventual entry by the French state into PSA's capital "will certainly be raised, but for now let's leave the companies discuss among themselves," Industrial Renewal Minister Arnaud Montebourg said on French radio BFM.

The GM-PSA alliance, which dates to March 2012, aimed to improve both companies' positions in Europe after the regional market plunged into a deep slump, weakening many automakers, including GM's loss-making German unit Opel.