Dongfeng Motor 800 million Euro to invest in Peugeot Citroen

　　The Economic Information Daily reporter learned from informed sources on the 18th that China Dongfeng Motor Group and France’s Peugeot Citroe ? n signed a memorandum of understanding on capital alliance. According to the agreement, Dongfeng Motor and the French government will invest 800 million euros in Peugeot Citroe ? n, each holding 14%. According to Reuters previously reported that the Peugeot family voted on the 17th to approve the agreement with Dongfeng and the French government.
　　It is understood that after Dongfeng Motor and the French government invested in the shares, the original Peugeot Citroe ? n’s largest controlling shareholder Peugeot family shareholding ratio will be diluted from 25% to about 14%. This means that the Peugeot family’s controlling position in Peugeot Citroe ? n will end, forming a situation where the three major shareholders hold the same proportion of share capital.
　　PSA Peugeot Citroe ? n has been hit hard by the European car sales crisis over the past six years, with a loss of up to 5.01 billion euros in fiscal 2012 pushing it to the brink of bankruptcy. The company currently relies only on a 7 billion euro guarantee from the French government for the sales financing unit to continue operations, but the bailout expires next year. The Peugeot family’s plan to sell shares to Dongfeng and the French government may be its last chance to survive after talks with General Motors of the United States failed to reach an agreement. Reuters sources said Peugeot Citroe ? n plans to sell new shares to Dongfeng Motor and the French government for 7.50 euros per share, a 41% discount to the company’s closing price on Monday. Peugeot Citroe ? n will also issue new shares to existing shareholders, thus raising a total of 3 billion euros.
　　Foreign media believe that after the completion of the transaction, it will further strengthen the existing cooperation between Dongfeng and Peugeot, increase production in China, and help Dongfeng enter the South East Asia auto market. This is an example of Chinese automakers taking advantage of the difficulties of the European auto industry to acquire high-quality assets. Through the acquisition, Dongfeng will also be able to share research and development technology with Peugeot, including Peugeot’s air hybrid technology HYbridAir, which combines gasoline engines with air compression technology to recover energy and achieve fuel savings.
　　However, the above-mentioned people familiar with the matter told reporters that it is difficult to predict whether the investment will have a corresponding return for Dongfeng Motor. On the one hand, domestic car companies lack international operation experience; on the other hand, the French government has also participated in this round of investment for the purpose of protecting domestic companies. On the future, Dongfeng Motor is likely to face joint intervention from the French government and the Peugeot family in decision-making.
　　Zhu Fushou, general manager of Dongfeng Motor, previously said that investing in Peugeot Citroe ? n can bring advanced technology and other richer resources. In this regard, many industry experts believe that Dongfeng Motor’s investment in Peugeot Citroe ? n is not a simple equity acquisition, but to accelerate the globalization of the Dongfeng brand by participating in the operation of multinational companies.