Peugeot's SEO

French auto maker Peugeot announced a 3 billion euro ($4.1 billion) capital increase. Dongfeng, Peugot's Chinese partner, will put up 750 million euros, the French government will put up 750 million euros, and the company will have a rights issue for an additional 1.4 billion euros. Peugeot needs the additional equity to fund new models and expand into new markets. Because the new shares will be sold at a discount and dilute existing shares, you would expect a stock price reaction. Indeed, you are correct as Peugeot's stock price dropped 11 percent.