The founding family behind PSA Peugeot Citroen has approved the 3 billion euro ($4.1 billion USD) deal between the French government and Chinese automaker Dongfeng just an industry analyst penned an open letter for PSA chairman Thierry Peugeot to reconsider before it becomes too late to turn back.
Automotive News and Reuters report the deal would give Dongfeng and France each 14 percent controlling interest at 7.50 euro/share, while the family’s 25 percent stake and 38 percent of voting rights would be brought down to parity with the two parties. The increase in capital — sought by Peugeot as a last-ditch effort to remain solvent after 7 billion euros in state guarantees expire in 2015 — comes with a warrants issue for current shareholders to buy additional stock worth 1 billion euros.
The vote was met with opposition from within the family and from industry analysts, such as Max Warburton of Bernstein Research. In an open letter to PSA chairman Thierry Peugeot, Warburton urged him to scrap the deal and follow the roadmap taken by Ford and Fiat by hiring a chief executive to help turn around his namesake company without bringing in outside parties into the fold:
Their family stakes remain intact. Their shareholders are happy. Neither are reporting to government officials. There are lessons for you and the rest of the Peugeot family from their experiences. It’s not too late to turn back from Wuhan and fight on.
Warburton’s other suggestions include closing a Spanish plant, halt R&D for a year, and sell their controlling stake in supplier Faurecia.
Within the family, Theirry pushed an alternative plan to his cousin Robert by selling new stock on the market without seeking help from France or Dongfeng, warning that the deal would create an unmanageable three-headed hydra of a governance structure. He was also concerned by a clause in the deal that would prevent the three stakeholders from increasing their stakes over several years, fearing that the Peugeot family wouldn’t be able to regain their company at a future date. Thierry was overruled, and support for the three-way deal moved forward.
As for who will become the new chairman of the company, Dongfeng wants a chairman independent of Peugeot while the French government support PSA board member and former Airbus chief Louis Gallois. The Peugeot family have suggested former Nexans CEO Gerard Hauser, as well.