PSA and Dongfeng Close To Inking Deal

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    PSA and Dongfeng are reportedly closer to signing a deal which will see Dongfeng become a stake holder in the French automotive company. Chinese and foreign media are reporting that PSA’s supervisory board have approved the draft deal at a meeting late on Sunday which cited sources wishing to remain anonymous.

    Dongfeng are looking to take a significant stake of their joint venture partner PSA with a capital injection of 3 billion Euro with the French government expected to take a similar amount which will help PSA stay liquid as the European car market continues to slump. Peugeot posted a 5% sales decline in global sales in 2013, whilst Chinese sales jumped 26% to 550,00 units.

    But the board agreement now clears the way for Peugeot to finalize a deal in which Dongfeng and the French government each would acquire 14 percent stakes at a price between 7.5 and 8 euros per share, according to French newspaper Les Echos.

    The French government and Dongfeng are expected to take 14% share each of PSA for between 7.5 and 8 Euros per share, which would dilute the Peugeot family holding in the company to 14% from the current 25%.

    In the Chinese market PSA operates two joint ventures, Donfeng-Peugeot and Dongfeng-Citroen in Wuhan, and also CAPSA with Chang’an Auto based in Shenzhen.