Report – Dongfeng in agreement with PSA image

According to a source within China’s Dongfeng that talked to Reuters, the company and PSA will sign today a non-binding memorandum of understanding that would see the French starting their 3 billion euro fundraising.

A Dongfeng executive with direct knowledge of the matter told Reuters that China’s Dongfeng Motor Group Co Ltd will agree to give, alongside the French state, 800 million euros ($1.10 billion) to acquire 14% of the PSA shares, in a move that would see Peugeot’s family stake diluted to the same amount – effectively ending control over the second biggest European automaker.

The source, which declined to make its identity public because the talks are not yet official, also confirmed earlier reports of Reuters, saying that PSA would also begin selling new shares to existing shareholders – thus reaching the targeted 3 billion euros ($4.1 billion) cash.

With this move, Dongfeng will join the plethora of Chinese companies that expand by investing into a Western brand that has problems – we could cite as examples the latest move of Lenovo Group Ltd (the No.1 PC manufacturer in the world) to acquire from Google the Motorola Mobility subsidiary. Or, just say Dongfeng is joining the likes of Zhejiang Geely Holding, who took Volvo and SAIC Group, who acquired South Korea’s SSangyong.

Via Reuters