PSA-Donfeng Deal Injects New Capital, Extended Life Into Peugeot

Cameron Aubernon
by Cameron Aubernon

The 3 billion euro ($4.1 billion USD) three-way deal between PSA Peugeot Citroen, Dongfeng and the French government, signed this week, is set to inject new capital and a much needed life extension for Peugeot, though at the expense of the Peugeot family ceding control after two centuries.

Reuters reports Dongfeng and the French government will each pay 800 million euros ($1.10 billion) for a 14 percent stake in the new alliance while existing shareholders will receive warrants entitling them to purchase new stock at 7.50 euro, ultimately adding 1 billion euros to the memorandum of understanding signed by the three parties. In return, the Peugeot family’s 25.4 percent stake and 38 percent of voting rights in their namesake company will be brought to parity with their new partners, ceding control after over 200 years of business while surviving the end of guarantees totaling 7 billion euros next year.

Aside from the new infusion of capital, the MOU calls for Peugeot and Dongfeng to sell 1.5 million units annually beginning in 2020, jointly establish an R&D center in Dongfeng’s home market, and consider a new sales wing focused specifically upon Southeast Asia. The third point in the MOU would allow Peugeot to fare better than it does currently, having only sold 6,500 units last year in its largest regional market, Malaysia.

As for Peugeot’s home market and the European market as a whole, analysts warn the MOU doesn’t address how Peugeot will address the ongoing problems the automaker has undergone over the past several years. Though some suggested freezing investments and selling more plants to save itself, French industry minister Arnaud Montebourg stated no further closures were “on the agenda.”

The deal will be formally signed in late March around the time of China’s president Xi Jinping visit to Paris.

Cameron Aubernon
Cameron Aubernon

Seattle-based writer, blogger, and photographer for many a publication. Born in Louisville. Raised in Kansas. Where I lay my head is home.

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  • ToolGuy North America is already the greatest country on the planet, and I have learned to be careful about what I wish for in terms of making changes. I mean, if Greenland wants to buy JDM vehicles, isn't that for the Danes to decide?
  • ToolGuy Once again my home did not catch on fire and my fire extinguisher(s) stayed in the closet, unused. I guess I threw my money away on fire extinguishers.(And by fire extinguishers I mean nuclear missiles.)
  • Carson D The UAW has succeeded in organizing a US VW plant before. There's a reason they don't teach history in the schools any longer. People wouldn't make the same mistakes.
  • B-BodyBuick84 Mitsubishi Pajero Sport of course, a 7 seater, 2.4 turbo-diesel I4 BOF SUV with Super-Select 4WD, centre and rear locking diffs standard of course.
  • Corey Lewis Think how dated this 80s design was by 1995!
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