PSA On The Death-Bed: Worth More Dead, Or Cut Up Into Parts?
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.”
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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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.
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?
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!
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.