French Finance Minister Pierre Moscovici said France is fully involved in the next phase of PSA Peugeot Citroen’s development, after the carmaker acknowledged it was pursuing a deal with China’s Dongfeng Motor Group underpinned by a capital increase.
Moscovici added that the government wanted Peugeot to find strategic partners that would enable it to expand.
“We want this company to be able to conclude strategic partnerships that will enable it to achieve the renaissance that it deserves and to find financial partners that will give solid support to this development,” he said.
PSA Peugeot Citroen, Europe’s second largest car manufacturer actually needs all the help it can get, as it was among the worst hit by the continued economic slump in Europe.
Also, just yesterday, PSA announced it took a 1.1 billion euro ($1.52 billion) write-down at its ailing overseas operations and Gm decided to sell its 75 stake in the manufacturer.
Right now, it looks like the proposed capital increase is the only thing that could allow it to survive, as it needs to tie-up with China’s Dongfeng Motor Group – giving it the time and cash to pull out of its downward spiral.
According to a source familiar with the matter, Peugeot’s board agreed to enter final talks to sell 20 % stakes to France and Dongfeng in a capital hike likely to be priced below 7 euros per share after the Chinese carmaker made an indicative offer of 6.85 euros.