PSA Supervisory Board Agree to Dongfeng and French Government Investment

The supervisory board of PSA PeugeotPeugeotFrance, 1882 > present120 models
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-CitroënCitroënFrance, 1919 > present94 models
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has agreed to raise $4.1 billion (3 billion euros) by selling shares to Chinese automaker Dongfeng Motor and the French government. The move is meant to save the company from bankruptcy and strengthen its position in China. It will also mean that the Peugeot family will lose its controlling stake in the company for the first time since it was founded in 1896. If completed, Dongfeng, the French government and the Peugeot family would each hold 14% of the company. Peugeot-Citroën has not yet officially commented on the deal citing ongoing negotiations.

Sources speaking to the French Les Echos newspaper say that Dongfeng and the French government would each pay 750 million euros for 14% shares in Peugeot-Citroën. Nine percent of those shares would come from the Peugeot family, which would drop its stake in the company from the current 25% to 14%.

The remaining money would be raised would be raised through a rights issue where current shareholders would be able to buy shares at a specified price. That price has not yet been revealed.

The company is trying to finish the deal by February 19 when Peugeot-Citroën is due to announce in 2013 sales and financial results.

"If we invest in Peugeot, it will bring benefits such as technology and other resources that will help us develop our own cars," said Dongfeng General Manager Zhu Fushou.

The new year is shaping up to be a major turning point in Peugeot-Citroën’s history. It has hired former RenaultRenaultFrance, 1898 > present189 models
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Chief Operating Officer Carlos Tavares to be new CEO starting later in the year.

Peugeot and Dongfeng already operate a joint venture in China that builds and sells vehicles.

Source: Auto News Europe