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Days ago, we read that PSA Peugeot Citroen’s founding family could hand control of the financialy troubled carmaker over to General Motors in return for a fresh capital injection. Now, an AFP reports says that PSA and Dongfeng, China’s second largest automaker, has held talks about the latter buying a stake in the French carmaker.

Apparently Thierry Peugeot, chairman of Peugeot’s supervisory board, had “pinned his hopes” on Dongfeng Motor, which is Peugeot’s JV partner in China, 21st Century Business Herald said. The Peugeot family owns an overall 25.4% stake in the company that commands 38.1% of voting rights.

The Chinese newspaper quoted two unnamed sources as saying discussions had taken place between both parties, but it was unclear if a deal could be reached. “Both parties have been in contact for a period of time, but the content of the discussions is very complicated and the progress is slow. Currently there’s no sign indicating whether this issue can be finally concluded,” one source said.

“Currently, the acquisition price hasn’t been decided. Besides that, the stake acquisition plan still needs approvals from the boards of both parties,” the other source said.

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As expected, Dongfeng and PSA refused to comment on the report. “We have noticed some media reports but we won’t comment on this issue,” Dongfeng’s spokesman told AFP. A China-based spokeswoman for PSA also declined to comment, describing the reports as “rumours”.

PSA Peugeot Citroen is suffering from a weak European economy that has seen demand for cars slump. The domestic market-dependent company burned €3 billion (RM12.4 billion) in operating cash last year, with its shares falling 77% over the past two years.

Jobs have been cut, a production plan at Aulnay has been shelved and there has been a bailout by the French government. The carmaker must lay the groundwork for a capital injection this year, sources have said.

Reuters also reports that PSA Peugeot Citroen CEO Philippe Varin is expected to present a new industrial plan within months, with some officials also suggesting that the government or a state-owned investment vehicle could take a stake in Peugeot if necessary.