PSA Confirms Search for New Partner

PSA Peugeot Citroen acknowledges it is discussing new partnerships and their "financial implications," according to media reports.

On Tuesday China Business News cited an unidentified source at Dongfeng Motor Corp., who says the Chinese carmaker is prepared to buy a 30% stake in PSA for 10 billion yuan (€1.2 billion).

PSA is 25.5% owned by the Peugeot family and 7% by General Motors Co. Analysts point out that any buyer of a 30% stake in a listed company in France also must make a tender offer for all remaining shares.

GM, which has the option of exiting its partnership if control of PSA changes, indicated last month it was not concerned about a possible Dongfeng investment in the French company. Whether the Peugeot family would accept losing control of PSA is far less certain.

PSA has a 20-year-old non-equity alliance with Dongfeng. Reports last month said the companies were investigating an investment by Dongfeng. But PSA CEO Philippe Varin told reporters any such deal would depend upon the partners agreeing on a vehicle co-development project.

Dongfeng and PSA jointly operate three assembly plants that will have combined capacity to make 750,000 vehicles per year by 2015. PSA also launched a venture this year with Chongqing Changan Automobile Co. with annual capacity to make another 200,000 units. PSA has predicted it will sell 556,000 vehicles in China this year.