GM exit Peugeot, finds Dongfeng as new potential partner in tie-up talks
PSA Peugeot Citroen recently confirmed that it has engaged with Dongfeng regarding a potential tie-up as General Motors Co announced its 7% shareholder interest exit from the second-biggest carmaker in Europe.
In a report on iAfrica.com, Peugeot clarified that talks with the Chinese giant were still in the preliminary stage, and that there has been no agreement made yet with Dongfeng. On the other hand, GM said the French car maker was no longer needing the US company's support.
GM Vice Chairman Steve Girsky said, "Our equity stake was planned to support PSA in their efforts to raise capital at the time of the creation of the GM and PSA alliance, and that support is no longer needed." On the other hand, Girsky assured that its strategic cooperation with Peugeot, which aimed to improve the companies' position in the European region, will continue.
Dongfeng said that it was still studying the rationale of acquiring a stake in Peugeot.
A source had disclosed that the amount of capital that could be injected in a potential Peugeot-Dongfeng deal could be €3.5 billion or $4.8-billion. The source, who is familiar with the talks, also added that there is a possibility that the state of France and Dongfeng will each be acquiring the same majority percentage of new shares issued, and that the rest of the investors will be acquiring the remainder.
Peugeot is said to be revamping its management in light of the decline in the car market in Europe and after its sales retained its slump. Rumors are also swirling that the French automaker will be doing a major shakeup of its company ownership. Multiple reports in the last few months indicate a sharp reduction of the Peugeot family's holding in the car company, which now controls around a quarter of total shares outstanding and 38.1% of voting rights.
On the other hand, Industrial Renewal Minster Arnaud Montebourg insisted that Peugeot will remain a French brand in the midst of the company's talks with Dongfeng. The state of France through the prime minister's office also assured the public that it will be keeping an eye on the Peugeot-Dongfeng talks.