PARIS: French carmaker PSA Peugeot Citroen says it has closed a deal to raise roughly $1.3 billion by issuing new shares to fund its tie-up with US giant General Motors (GM).

The announcement advances a partnership meant to help the companies ease their struggles in Europes fiercely competitive and oversupplied car market.

The automakers are sharing vehicle platforms and pooling the purchasing of components and services to save money.

The partnership is expected to save them $2 billion a year within five years. The benefits are expected to be split roughly equally.

GM is becoming Peugeots second-biggest shareholder with a 7% stake in the European automaker—the biggest shareholder is the Peugeot family.