Peugeot enters final talks on €3.5 billion share sale

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French carmaker PSA Peugeot Citroen's board has approved a plan for an alliance with Chinese state-owned automobile manufacturer Dongfeng Motor Co.

According to a report by Reuters, Peugeot's board agreed to enter final negotiations on a €3.5 billion ($4.8 billion) share issue. Under the deal, Dongfeng and the French state will each take a 20% stake in Peugeot.

The capital increase would be priced below €7 per share. It could be priced as low as €6.85 per share based on an indicative offer from Dongfeng, the report said.

Reuters, quoting Peugeot's outgoing chief executive Philippe Varin, said the French carmaker is exploring a deeper relationship with Dongfeng. The two companies were said to have been in talks for months to extend cooperation to other Asian countries after the multi-billion euro share sale.

The founding Peugeot family would lose control of the car manufacturing company. Its stake was diluted from 25% to 15% even after acquiring some new stock in the rights issue, the report said.

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PSA Peugeot Citroen, France

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