The decision was painful, but it has finally arrived. The family Peugeot takes a step back in the automaker's capital to favor the entry of the Chinese Dongfng Motor Co., flanked by the French state.
Finance Minister Pierre Moscovici guaranteed that the Paris government "will do everything, use its influence to ensure that Peugeot-Citroen remains a French car manufacturer". An intention reaffirmed by the owner of Industria, Arnaud Montebourg, who confirmed that the French Executive has met both the representatives of the Chinese Government and the top management of Dongfeng.
The entry of new members will be possible thanks to a capital increase quite onerous. PSA Peugeot-Citroen's supervisory board has approved the preliminary terms of the deal, which could be worth up to three billion euros.
After a five-hour meeting concluded late yesterday evening, board members gave Chief Executive Officer, Philippe Varin, a mandate to enter into formal talks with Dongfeng and the French government, which they are expected to sign respectively 30 and 50% of the increase.
The Peugeot family, so far the group's largest shareholder with 25,4% of the capital, should contribute an amount included between 80 and 120 million euros to avoid excessive dilution of its holding. Once the deal is completed, Dongfeng, the French state and the Peugeot family are expected to hold shares of equal value.
The recapitalization is necessary to address the group's financial difficulties, supporting industrial, commercial and R&D investments and strengthening the company's presence on foreign markets.
It seems that some members of the Peugeot family - in particular the chairman of the supervisory board, Thierry Peugeot - would like to avoid relying on Dongfeng and the French government, favoring recourse to the market to raise the full amount of the increase.
However, many executives and board members fear that investors, despite the recent rally in stock markets, are not willing to take on a deal of this size, especially since the group has been loss making for several quarters.
