Peugeot dropped from CAC 40 as value dwindles
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Peugeot has been a member of the CAC 40 since the creation of the index in 1987. |
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PARIS (Bloomberg) -- PSA/Peugeot-Citroen will be removed from France's leading stock index after its shares declined more than 60 percent in the last 12 months.
Peugeot shares have been trading near a 26-year low in recent months as Europe's economy struggles. The automotive division has been burning through 200 million euros ($250 million) in cash a month for the last year, CEO Philippe Varin said in July as the company reported an 819 million-euro first-half net loss.
Europe's second-largest automaker will be replaced by chemicals and plastics maker Solvay SA in the CAC 40 index on Sept. 24, NYSE Euronext said in a statement. Peugeot has been a member of the CAC 40 since the creation of the index in 1987.
Jean-Baptiste Mounier, a spokesman for Peugeot, declined to comment.
Peugeot's stock declined as much as 3.1 percent today and traded at 5.97 euros, down 1.2 percent, at 9:10 a.m. in Paris.
"Peugeot has been the weakest weight in the index for several quarters now," Christophe Wakim, a quantitative analyst at Exane BNP Paribas, said in an interview with Bloomberg TV before the decision. "It's just the reflection that Peugeot, unfortunately, has destroyed value for its shareholders."
Solvay, a maker of chemicals and plastics, gained as much as 2.4 percent in Brussels and was up 2.2 percent at 90.84 euros.
Board rules
The decision to remove Peugeot came after a meeting of NYSE Euronext's seven-member scientific board, led by Roland Bellegarde, executive vice president for European listings and cash trading at the transatlantic stock exchange.
Reviews take place every quarter. The board is guided by the number of shares available, known as free float, as well as market capitalization and revenue trends, NYSE Euronext said in a separate statement.
The board picks "the most representative stocks," it said. The last criteria "is the most sensitive one, as Peugeot still employs directly about 100,000 people in France," Florent Couvreur, an analyst at CM-CIC Securities, said by phone. "Its shares are indeed very low, but their price could double quickly if macroecomonic conditions improved."
Stocks that are deleted from the CAC 40 usually underperform the index over the year following their exit, according to Exane BNP Paribas.
The average decline is about 15 percent, analysts at the brokerage said in a note.
Peugeot shares were first listed in Paris in 1925 and have traded continuously since then.
Continental AG, Europe's second-largest auto-parts maker, returned to Germany's benchmark DAX index after a 45-month absence in a sign of its recovery from debt woes that encouraged a takeover bid from Schaeffler Group.
Among several changes in the gauge of Germany's 30 biggest listed companies, MAN SE was removed after Volkswagen AG increased its stake in the truckmaker to more than 75 percent, Deutsche Boerse AG, the Frankfurt-based exchange operator that controls the index, said in a statement on Sept. 5.
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