Russian Railroad Is Lead Bidder for PSA Logistics Unit

PSA Peugeot Citroen has entered exclusive negotiations with JSC Russian Railways to sell 75% of the carmaker's Gefco logistics unit, according to news outlets citing anonymous sources.

PSA unveiled plans earlier this year to divest a majority of the unit's equity to raise cash.

A deal, which would value the entire unit at €1.3 billion, could be reached within weeks, Reuters reports. Bloomberg News, citing French union leader Christian Lafaye, says three-quarters of Gefco would cost €1 billion-€1.5 billion.

Russian Railways CEP Vladimir Yakunin confirms to reporters that the Moscow-based company is in talks to acquire 75% of Gefco. He says the railroad wants to establish a logistics arm for its train operations, as some of its European rivals have done.

Russian Railways, which has a monopoly on the country's train service, employs 1.3 million people. Russia has the second-largest network of track after the U.S.

Gefco tells Bloomberg it derives 60% of its revenue from automotive customers, including BMW, Ford, PSA and Renault. The unit will take over most of General Motors' logistics business in Europe next year as part of PSA's alliance with the U.S. company.