Peugeot family approves Dongfeng share deal
Reuters in Paris
PSA Peugeot Citroen’s founding family gave the go-ahead on Monday for a 3 billion euro (HK$31.9 billion) tie-up with China’s Dongfeng Motor that would draw a line under one of France’s oldest industrial dynasties, sources said.
The boards of Peugeot family holding Etablissements Peugeot Freres and its FFP subsidiary signed off on the capital increase plan to be announced by the French carmaker on Wednesday, two people with knowledge of the meetings said.
The two holding companies approved “all of the proposals” negotiated with Dongfeng and the French state, one source said.
Peugeot and Dongfeng had been in talks for months over a rescue deal in which the Chinese carmaker and French government would take matching 14 per cent stakes.
The plan is due to be approved by Peugeot’s own board on Tuesday and announced the following day, sources have said.
A separate agreement to create a European sales financing alliance with Banco Santander is due to be unveiled simultaneously, according to people with knowledge of the plans.
A Peugeot spokesman declined to comment on the discussions.
Among the worst casualties of Europe’s six-year market slump, Peugeot is being kept afloat by 7 billion euros in state guarantees to its sales financing arm that expire next year.
Under the deal, Peugeot plans to sell new stock to Dongfeng and the French state priced at 7.50 euros, a 41 per cent discount on Monday’s 12.79 euro closing price, followed by a rights issue to existing shareholders, sources have said.
The family’s 25 per cent stake and 38 per cent of voting rights would be diluted to parity with the government and Dongfeng, short of the one-third required to veto decisions.
The proposed Dongfeng deal has divided the family, pitting chairman Thierry Peugeot against cousin Robert, who heads FFP.
In a letter to Robert, leaked to French media, Thierry pushed an alternative plan to raise cash on the market and inject more family money. But he failed to win board support and abstained from votes to pursue the talks.
After the deal, subject to shareholder approval, Peugeot and Dongfeng would reinforce their existing joint venture and Chinese production, entering new Southeast Asian markets.