By on July 5, 2013

Death bed - Picture courtesy CNN.com

Imagine (sorry) you are on your death-bed, surrounded by your friends and families, who are divided in two camps. One group bets big on how soon you will die. The other group calculates how much your body-parts will bring after you are cut up. Now you know how PSA poor Peugeot Citroen must feel.

According to Reuters, the battered PSA stock jumped 8 percent yesterday after Goldman Sachs said the company is worth more than the €6.7 a share, if one would “focus on a SOTP (sum of the parts) valuation.” Usually, the whole is supposed more than the sum of the parts, but in the perverted world of financial double-speak, SOTP valuation means the parts could be worth more than the sum. That seems to be the case here. The market is betting that Peugeot is being broken up and sold by the piece.

Until yesterday, the market was betting big that PSA would croak.  Says Reuters: “Hedge funds have been betting on falls in Peugeot’s shares, making it one of the biggest short-selling targets in Europe in the past year. According to data from Markit, 10.2 percent of Peugeot shares outstanding are out on loan.”

So what would you be saying if you overhear the discussions of the two camps by your sickbed? I know what I would say: “Nurse, crank up the Morphine.”

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14 Comments on “PSA On The Death-Bed: Worth More Dead, Or Cut Up Into Parts?...”


  • avatar

    DO NOT RESUSCITATE.

  • avatar
    highdesertcat

    Sum of the parts is my vote. Then again, that’s what I said about GM (and Chrysler) as well, and we all know how that turned out.

    OTOH, maybe all PSA needs is a sugar-daddy like Uncle Sam that likes to allocate taxpayer money to dead or dying companies.

    All companies have a life-cycle after which time they die. GM, Chrysler and now PSA are no different. Trying to keep a failed business alive at all costs may work for the few, but happens at the expense of the many.

    Best case scenario: break up PSA and sell off the parts to anyone who wants it for anything they can get for it. With a little incentive, (what’s a couple of billion here or there in bribe money?), Sergio and Fiat may even be interested.

    Worked wonders for dead Chrysler.

    And then there’s GM…………………………………

    • 0 avatar
      Lampredi

      Well, if PSA is sold off, whole or in parts, there’s a significant risk that it might end up becoming Chinese. Now, do we really want that?

      • 0 avatar
        highdesertcat

        So, what’s wrong with PSA becoming Chinese?

        Current examples are Land Rover/Jaguar going to India. Volvo. Chrysler becoming Italian. Nissan fooling around with the French Connection. Saab anyone?

        Better Red than Dead.

        • 0 avatar
          Lampredi

          PSA becoming Chinese could accelerate the demise of car industries in the West – sad for those of us who want it to survive and prosper, but perhaps not such a big deal for others.

          • 0 avatar
            highdesertcat

            This is an ever-changing industry on an evolving planet. Change is always controversial because it is good for some, not so good for others.

            If the car industries of the West are in danger of facing a possible demise, maybe the car industries of the West cannot change because of unions and government mandates that prevent the industry from competing with the likes of producers in Asia that can do the same things for less and do it better.

            One example of change for the better in the auto industry of the West is the outsourcing to Canada and Mexico, and the transplants setting up shop in America.

            After all the fear mongering by the unions in America, the end result was a better product for the consumers, and greater profits for the manufacturers.

            My point here is, if China can do it better, maybe PSA stands a better chance of surviving under Chinese ownership.

            Look at JLR and Chrysler. Both doing much better under foreign ownership and in Chrysler’s case, effectively marginalizing the UAW as well.

            Better product, less interference, happier customers, greater profits.

  • avatar
    schmitt trigger

    The EU bureaucrats in Brussels may complain to the almighty, but I don’t think the French government will allow it to die…

    Or perhaps they will insist that GM foots the bill, in retribution for the NSA spying on the EU.

  • avatar
    StealthSpiker

    Call up PSA.

    I’ll take Citroen and all but one French plant for $1 plus some working capital (tap that French loan). That would allow the Opel-Peugeot JV to go forward WITHOUT taking on much French capacity. Meanwhile, I will sell the new GM-PSA European JV the cars that they need until they figure out how to rationalize their lineups.

    I would then reintroduce Citroen to North America and take over Fisker’s plant in Delaware if the DOE reopens their loan. As part of the deal, GM coughs up some pickup trucks and vans for me to sell globally as well as a Caddy to rebadge as a new Citroen C6. While my Citroen would not officially be part of the JV, we would provide surge manufacturing capacity for the JV if they needed help.

  • avatar
    Joss

    PSA are to blame for their current situation. French governments made it too easy for them to bon voyage
    .
    As for the sum or the whole – depends what they’ve got that’s worth unlocking. The Chinese will get what they want eventually.

  • avatar
    rnc

    VW will take citreon over anyone else, perfect opertunity for them to amortize thier investments in the A8 and Bentley (and bugatti to extent) and allow them to reintroduce another goddess, floating (Bentley), (lightweight aluminum) Audi, small displacement, but powerful(TT W4 perhaps) from bugatti, as to be unique from porsche, doesn’t step on Audi’s, Porsche’s or Bentley’s shoes, and they’ll be able to sell at one hell of a premium (other than that, no one is going to touch PSA before it dies, no one is going to deal with those unions, capacities or the rench government in life support mode, they have nothing, besides maybe some deisel tech, that anyone else would want), citreon will have to be reborn, all new and independent. So we know who dies first.

  • avatar
    Dimwit

    It doesn’t matter what they’re “worth”, it matters on what someone, anyone will pay. There’s so much overcapacity that any plant is redundant and are the brands that valuable? I’m not so sure. Geely certainly doesn’t seem to have done wild things with Volvo and none of the PSA brands seem to have much cachet in China.

    So… who will buy?

  • avatar
    oldyak

    No room for niche brands anymore…..
    Seeing once famous brands disappear has become the new Normal!
    I can see a future with only a handful of manufacturers..and few of them brands we older enthusiasts grew up with!

    • 0 avatar
      gottacook

      In that future (not too far off) there will continue to be people who want to, for example, keep driving a car with a stick shift. Thus will the older cars continue to be maintained, even if their successors never appear. I hope to keep our 7- and 10-year-old Subarus going for another decade or two, especially because you can’t buy new ones that have anything in common with them except for the boxer engine and the badge.

  • avatar
    Big Al from Oz

    My gut feeling is the Renault-Nissan alliance will buy out PSA.

    First up Mitsubishi and Nissan are platform sharing MPVs, car, and commercial vehicles in regions around the world ie, Arab countries, Japan, SE Asia etc.

    Mitsubishi has several links with PSA as well. GM can’t afford to wipe its ass, let alone want to buy PSA.

    In France it will easier for Renault to take over PSA operations and be easier politically with the French government and unions.

    Time will tell. I predicted this a while ago. Funnier things have occurred in the business world.

    I can also see the Renault-Nissan alliance buying out Mitsubishi in the future.


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