The ailing French carmaker, which is Europe’s second biggest behind VW AG, said in a statement that its board of directors backed Chief Executive Philippe Varin in continuing the Dongfeng Group deal.
This restatement of intentions comes after reported dissensions between the controlling Peugeot family over the draft deal that would see a capital increase and share sale to Dongfeng and the French government were made public these days.
Peugeot directors “expressed full support for the plan presented by the management team and authorized it to pursue negotiations with a view to an approval by the board on February 18″, the company said in the statement.
ADAM, a well known French shareholders’ rights group earlier this week expressed concerns regarding the problems posed by the two new major shareholders and the dilution of existing investors. Also, according to a source with knowledge of the matter, Chairman Thierry Peugeot was a supporter of a different plan that would see PSA raise the money directly on the market and have the stake piece sold to the French state reduced.
PSA, which relies heavily on the European market – hit by a six year low demand – desperately needs a cash infusion to stay competitive and started talks to upgrade cooperation with Dongfeng, its existing partner in one of its Chinese joint ventures.