In the current context of the upcoming merger of the PSA and Fiat Chrysler Automobile groups, the Peugeot Citröen group has just announced that it will buy back part of its own shares from the Chinese company Dongfeng, under the terms of the agreement signed in December 2019.
In total, 10 million PSA shares will therefore be bought back from Dongfeng, representing nearly 1.10% of the group's share capital. These shares are thus acquired on September 23, 2020 in an off-market transaction and at a price of €13,385 per share, i.e. the share price on September 16.
It should be recalled that this operation follows the share buyback agreement signed on December 17 and the decision of the Supervisory Board of PSA which was held on September 14, 2020, just a few days ago. In the press release published today by PSA, the amount excluding expenses of these shares thus reaches €163,850,000 and they will be cancelled after the settlement-delivery which must be made on September 25, i.e. at the end of this week. This cancellation is, of course, in line with the group's share buyback programme.
This share buyback-cancellation operation is also in line with the planned merger between PSA and FCA, the aim of which is to create a new entity, called Stellantis, which will be the fourth largest car manufacturer in the world in terms of volume. An amendment to the share buyback agreement of December 17, 2019 has also been proposed, which provides in particular that the 20.7 million additional shares to be sold by Dongfeng may be sold to one or more third parties and in one or more transactions. It is also known that the disposals will have to be completed before the end of 2022 in the event that Dongfeng has not sold its shares to the PSA Group or to one or more third parties by 31 December 2020.
The share buyback we are talking about is quite logical in the context of the PSA-FCA merger because it is supposed to allow a balance of shareholders by leaving free cash to the new group. Stellantis will thus have 2.6 billion euros more cash than expected even in the context of the global pandemic.
It should also be noted that the Peugeot family also increased PSA's capital by 2% last March, as authorized by the agreement signed with Fiat. This family thus holds more than 14.2% of the PSA group. On the investors' side, this share buyback operation is seen as a sign that the planned merger is proceeding normally after the final adjustments due to the Covid crisis, including the clause barring the transferability of Faurecia shares for six months.