Minority Shareholders Say PSA Equity Deal Could Trigger Buyout

A group of minority shareholders complains that PSA Peugeot Citroen's proposed €3 billion capital increase plan will hurt the company by making it tougher to line up alliances with other carmakers, Reuters reports.

The group, called ADAM, owns six shares in PSA. It claims in a letter to PSA Chairman Thierry Peugeot that the funding scheme will discourage other potential investors and could trigger a buyout of existing minority shareholders.

The PSA plan includes selling 14% stakes to the French government and China's Dongfeng Motor Corp. The Peugeot family also might buy shares to maintain a 14% stake in the company. Thus the trio would acquire a combined 42% equity in PSA.

French rules say any single investor that gains a stake larger than 30% must offer to buy all remaining shares in the company. ADAM theorizes that French regulators might regard the three investors as acting in concert. If so, it speculates, the trio could be forced to offer to buy out PSA's minority shareholders.