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Dongfeng and France to invest in Peugeot

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October 12
1:24 AM 2013

A EUR 3 billion capital increase would be done for PSA Peugeot Citroen with funding coming from matching contributions from the French government and Dongfeng, the Chinese partner. This transaction was confirmed by individuals with knowledge of the transaction last Friday.

A group of French executives, government officials and bankers would be travelling to China to discuss the matter and prepare an outline for a deal that can be formalized within the next few weeks. The sources sought anonymity as the transaction is still to be made publc.

Under the agreement, China's state owned Dongfeng Motor Co Ltd and the French government would be investing EUR1.5 billion each to acquire between 20% and 30% of the carmaker. As a result, the Peugeot family would lose majority ownership over the carmaker, as the cash infusion would dilute its 25.4% shareholdings and 38.1% voting rights.

Another aspect of the capital increase would be a attendant expansion of DPCA, the joint venture between Dongfeng and Peugeot in China. This would add more Peugeot vehicles and technological services to the region.

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