PSA Peugeot Citroen, Dongfeng, France Reach Outline Deal
PSA Peugeot Citroen, Dongfeng and the French government have reached an outline deal to raise $5.5 billion in capital through a planned share sale in a last-ditch effort by PSA to remain alive after General Motors walked out of a similar deal over the Iranian market last year.
Reuters reports the deal will be presented to the Peugeot board February 18, at which point the board will sign a non-binding memorandum of understanding that same day according to sources closest to the matter. The plan would allow Dongfeng and the French government to each own 14 percent of PSA, while the two automakers retain and expand upon their alliance toward their goal of penetrating further into the Southeast Asia market.
With most of the plan settled, the only item needed to pull everything together is an independent chairman who will oversee the plan’s implementation. The French government wants senior civil servant Louis Gallois, brought aboard under the existing agreement between the state and PSA since 2012, as their champion, while Dongfeng is pushing for French businesswoman and independent Peugeot director Patricia Barbiezt to fulfill the role.
Thanks TTAC Staff!
Wait, what happens to Carlos Tavares, the about-to-be new CEO? The board that hired him is being reconstituted with new ownership and a new chairman. Also, $5.5 billion sounds like a lot, but that's usually what it costs for one major model development. If they could spin off models from a new platform like Iacocca did with the K-car, fine, but PSA is due to announce its annual financials, and the $5.5 billion might be needed just to cover losses.