By on February 18, 2014

Peugeot China 508

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.

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22 Comments on “PSA-Dongfeng Deal Approved, Chairman Urged To Scrap Deal...”

  • avatar

    Just let it die a natural death please.

  • avatar

    To quote Richard Hammond, “this can only end well”.

  • avatar

    What does the Chinese bit on the trunk lid say. Does it say “Dongfeng?” I swear China is the only country using anything but English lettering and/or numbers on their cars.

    Very tidy looking rear end of a car though, minus the add-on characters.

  • avatar

    I’d say this guy must want Peugeot to fail spectacularly. His idea of finding some CEO to turn around the company is okay, but it’s not like they grow on trees, and some would say Fiat is a work in progress, to put it mildly. The “idea” of cutting out R&D for a year seems suicidal. It’s not like cutting off a water tap, and it will take a whole lot more than a year to catch up to the competition, if you ever do. I don’t think anybody has been complaining that Peugeots are too advanced compared to their competition.

  • avatar

    Put up or shut up. France should sell their shares as well and let Dongfeng get on with building Peugeots and Citreons.

  • avatar

    I saw a new-ish Peugeot 308 in the DC area over the weekend. It had diplomatic plates.

    Not really related, just thought it was interesting to spot one of those on US roads.

  • avatar

    Cameron, do you have photos of the front of the car?
    I hope that PSA gets through it’s “malaise era”. In my opinion they’ve built some decent cars over the years and I’ve owned several.
    My first was a 1970 DS21 Pallas, even then it had”adaptive headlights”.

    • 0 avatar

      Do you have a Google?

      It’s just a 508 built by Chinese Dongfeng Peugeot.

  • avatar
    Ron B.

    A few decades ago I was employed as a marine engineer. Some of the locals had bought these marvelous little diesel engines that came complete with a battery,tools, strange instruction books and a very low price…Dong Fengs.
    They would soon learn that the chinese made incredibly shitty engines that would last long enough to stand the boat far out at sea ,then the tools and spare parts would be required to get home again. Some of the tools needed were not included in the kit though,such as the piece of bamboo to scrape the top of the piston and clean out the injector nozzles. And lighting pieces of rice paper to hold in front of the air intake to get a cold engine started is not a good idea in the bowels of a rolling vessel at sea.
    It will interesting to see if their workforce is still comprised of prisoners in slave camps.

    • 0 avatar

      I worked in Africa for the better part of a decade. I would support Africans in remote locations in the Congo, the Sudan, Uganda and these guys would end sentences with “…. and not that cheap Chinese shit!”

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