Peugeot Family Urges GM to Boost Its PSA Stake

The Peugeot family, which owns a 38.1% voting stake in PSA Peugeot Citroen, has offered to give up control to alliance partner General Motors Co. in exchange for a capital infusion for PSA, according to news reports.

But GM declares it has "no intention" of investing more money in the French company now. GM bought a 7% stake in PSA in early 2012 when the duo agreed to cooperate on purchasing, logistics and product development. The U.S. company wrote down half the value of that equity holding in February.

Analysts say that even if PSA attains its goal of halving cash outflow to €1.5 billion this year, its shrinking share of the declining European car maker means the company will soon need fresh capital.

Unidentified sources tell Reuters that GM would not pump more cash into PSA without assurances that it could slash the carmaker's excess capacity in France something its unions and the government would resist.

GM has considered buying some PSA assets, such as its powertrain operations, but it hasn't made any decisions, according to The Wall Street Journal.

PSA also held inconclusive talks about selling a 30% stake to a consortium led by its Chinese joint venture partner, Dongfeng Motor Corp., Reuters reports.

An analyst at Barclays plc suggests the Peugeot family is leaking word of a possible takeover by GM or Dongfeng as a "stalking horse." The move may be intended to frighten the French government and labor unions into accepting plant closings and sharp cuts in jobs.