Report: Dongfeng Cuts Back on Proposed PSA Investment

PSA Peugeot Citroen's hope of selling a 20% stake in itself to China's Dongfeng Motor Group may have faded, according to Bloomberg News.

The news agency cites unidentified sources who say Dongfeng has signaled an interest in buying no more than 10% of the French company.

Previous reports suggested that Dongfeng may be more intent upon strengthening the non-equity partnership it has with PSA, which operates three assembly plants in China.

PSA had hoped to raise at least €3 billion by selling equal 20% stakes to Dongfeng and the French government. Earlier this month Reuters said PSA is separately considering the sale of its 57% holding in partsmaker Faurecia SA, an option that might offset a lesser investment by Dongfeng.

A deal that results in the French government gaining a proportionally larger stake than Dongfeng would give France more clout in protecting jobs in the country, Reuters points out. It also reports that some members of the Peugeot family, which control 25.5% of PSA, oppose allowing more government influence in the company's affairs.