Dongfeng Motor Corp may buy a 30% stake in PSA Peugeot Citroen for 10 billion yuan (RM5.2 billion), China Business News has reported, and PSA has told Automotive News Europe that it is looking at new projects with different partners, “including the financial implications that would accompany them.”
Dongfeng is reportedly doing preliminary research on the PSA investment. If it goes ahead with the deal, it will become PSA’s biggest investor. The Peugeot family currently holds a 25.5% stake; GM a 7% stake.
“We have a partnership with Dongfeng and we are looking at how we can expand it, but nothing more has been decided,” a PSA spokesperson told ANE.
PSA CEO Philippe Varin had said that he was considering all options to expand the Dongfeng partnership, but the focus would first be on industrial cooperation before any financial links, according to ANE.
PSA has reported an operating loss of 510 million euro (RM2.2 billion) for its automotive unit in the first half of the year, and ANE says the carmaker is cutting 11,200 jobs in France and closing a factory outside Paris.
The domestic market-dependent company burned three billion euro (RM12.4 billion) in operating cash last year, with its shares falling 77% over the past two years. But its stock has more than doubled this year, valuing the manufacturer at 4.4 billion euro (RM18.93 billion).
“The two main questions are: how much do they need and where will they find the money?” ANE quotes CM-CIC Securities analyst Florent Couvreur as saying. ”I’m betting they need about two billion euro (RM8.6 billion) to face their debt obligations in 2014.”