Dongfeng Might Buy Big Stake in PSA

Chinese automaker Dongfeng Motor Corporation is reportedly planning to take a 30 percent stake in PSA/Peugeot-Citroen.

Doing that would make the Chinese company, which already has ties to PSA, its largest shareholder. It might also mean the Peugeot family would relinquish its control of the company given its 25.5 percent ownership over the company. Dongfeng is one of the three largest auto manufacturers in China and under French law anyone buying a 30 percent or greater stake in a listed company is required to make a tender offer on all if its remaining shares.

PSA confirmed to Automotive News that it is in talks with Dongfeng about expanding its partnership, but declined to elaborate. The European automotive market is about to count its sixth year in decline and a deeper tie-in with the Chinese company could help PSA expand beyond the region. General Motors would then become PSA’s third-largest shareholder.

While GM isn’t worried about Dongfeng moving in, the State-owned Chinese brand taking a major stake could hold greater implications. The move could essentially give Dongfeng, and by extension the Chinese government, a window into the ailing European car market.

[Source: Automotive News]