PSA Peugeot Citroen (UG), Europe’s second-biggest carmaker, announced plans to sell shares in a 1 billion-euro (1.32 billion) capital increase at a 42 percent discount to yesterday’s closing price. Shareholders, who will have the right to buy 16 shares for every 31 they already own, will pay 8.27 euros per share, the Paris-based carmaker said in an e-mailed statement. That compares with a closing price of 14.21 euros yesterday. General Motors Co. (GM) and Peugeot announced last week a broad alliance that will include joint purchasing and vehicle development in an effort to revitalize their European operations. GM will buy 7 percent of the French carmaker as part of the partnership. “This money will be directed to our strategic projects with GM,” Chief Financial Officer Jean-Baptiste de Chatillon said on a conference call with journalists today. “The money will allow us to accelerate this strategy.” Peugeot said that 31 percent of the shares were already subscribed through commitments from the Peugeot family and GM. The Detroit-based carmaker said yesterday that it had agreed to pay about 320 million euros to acquire its stake. Peugeot will not pay a dividend for 2011 and will instead use the money to fund projects. “We need our dividend to invest in projects despite the positive result,” the CFO said. New Models The offer price is a 32 percent discount to the theoretical ex-right price of 12.33 euros, the carmaker said. The Peugeot family will remain the largest shareholder following the increase, with 25.2 percent of the capital and 37.9 percent of the voting rights, Peugeot said. The family currently owns 30.3 percent of the capital. The agreement calls for at least four products to be manufactured within four years or planned for production within the following 18 months, GM said yesterday in a filing with the U.S. Securities and Exchange Commission. The initial terms of the alliance are for 10 years with automatic renewal periods of three years, GM said. The U.S. automaker will become the second-largest shareholder.