France Mulls Taking Stake in PSA

The French government is considering a plan to aid PSA Peugeot Citroen by buying an unspecified stake in the ailing carmaker.

Budget Minister Jerome Cahuzac tells Paris radio station RMC that PSA "must not disappear." He insists France will do whatever is necessary to save the company, including a possible share purchase by the country's sovereign wealth fund.

France is already the largest shareholder of the country's other domestic automaker, Renault SA, in which it holds a 15% stake.

But Prime Minister Jean-Marc Ayrault tells reporters buying a stake in PSA is not on the agenda because the company has not requested it.

General Motors Co. acquired a 7% stake in PSA last March as part of a purchasing and product-development alliance with the French carmaker.

PSA's financial woes are deepening. The company disclosed on Thursday that it will book a €4.1 billion ($5.6 billion) charge to 2012 results to reflect the deteriorating value of its auto assets. A union leader said last week that PSA is losing €7 million ($9.5 million) per day.

Analysts warn that government ownership could slow the company's efforts to restructure and delay its return to profitability. PSA aims to shutter an assembly plant near Paris and shed 9,500 jobs in France by next year.