PSA shares slump on reports of capital talks with Dongfeng

 
City A.M. Reporter
SHARES in PSA Peugeot Citroen fell as much as 10 per cent yesterday after reports it was preparing a €3bn (£2.5bn) capital increase in which Chinese partner Dongfeng and the French state would secure stakes in it.

A draft agreement, which Peugeot hopes to conclude this year, would envisage state-owned Dongfeng Motor and the French government each contributing €1.5bn to acquire matching stakes of between 20 and 30 per cent, people with knowledge of the matter have said.

Peugeot is seeking more cooperation with Dongfeng or another carmaker as it struggles to cut costs and losses that have threatened its survival.

PSA issued a statement reaffirming that it was examining new industrial and commercial projects with different partners, together with the financing that would accompany them.

The €3bn cash injection would amount to 68 per cent of PSA’s €4.39bn market value.

“There is no great secret, Peugeot is on the look-out for partners,” French finance minister Pierre Moscovici told French radio.