China and France have reached out to PSA

China and France have reached out to PSA

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Almost one third of the shares Peugeot Citroen enters into new hands

The second largest automaker in Europe, PSA Peugeot Citroën will receive solid financial assistance in exchange for large stakes. According to Reuters, a tripartite agreement was signed by the Government of France, PSA leadership and the Chinese company Dongfeng, which had previously expressed the intention to co-Peugeot Citroen.

Under the agreement, Chinese and French sides depart equal 14%-s shares, each of which will cost 800 million euros ($ 1.1 billion). Another € 1.4 billion will be drawn through the issuance of additional shares. All of these funds will be used primarily to repay most of high-grade credits, as well as to finance the development of new vehicles.

The signing of this agreement marks the first time during the existence of PSA control over it loses Peugeot family. Its share will be reduced from the current 25% to 14%, so that none of the parties will not be able to lobby for important decisions alone. According to unofficial information, the chairman Thierry Peugeot Citroen Peugeot intends to resign in protest against the decision.

Recall that the financial situation of one of the world’s largest automakers seriously undermined European recession. In 2012, the loss of PSA almost reached 5 billion euros in 2013 exceeded 2 billion euros. Attempt to establish an alliance with General Motors failed and was terminated in December last year. In these circumstances, support from the Asian markets, the yield on which helps provide Dongfeng, may be life-saving for the French.