PARIS--The French government and Chinese manufacturer Dongfeng
Motor Co. are expected to buy about half of the shares in French
automaker PSA Peugeot Citroën SA's (UG.FR) planned 3 billion euro
($4 billion) capital increase, French daily Les Echos reported
Monday.
Following a nearly five-hour meeting that dragged late into the
evening on Sunday, board members gave Chief Executive Philippe
Varin a mandate to start more formal talks with Dongfeng and the
French government, according to a person familiar with the
matter.
One scenario discussed by Peugeot's board involves Dongfeng and
the French government each buying EUR750 million in Peugeot shares,
priced between EUR7.50 and EUR8, according to Les Echos. The
company would then make an additional public rights issue to make
up the remaining EUR1.5 billion, Les Echos reported. The Peugeot
family would be expected to buy enough shares to maintain a 14%
stake in the automaker, according to Les Echos.
At stake is how to provide the loss-making company with the
financial means to pursue the heavy industrial, research and
development and commercial investment that it needs to ensure its
future and bolster its presence in overseas markets.
Les Echos said Peugeot's board is also considering replacing its
chairman, Thierry Peugeot. Leading candidates include Louis
Gallois, the French government's representative on the Peugeot
board, Les Echos said.
The board is seeking to finalize its plans for the capital
increase before Feb. 19, according to Les Echos, the date when Mr.
Varin is expected to hand the reins over to Carlos Tavares.
Newspaper website: http://www.lesechos.fr
Write to Stacy Meichtry at stacy.meichtry@wsj.com
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