PSA starts negotiations with Dongfeng and cuts synergies with GM
The PSA Group has officially confirmed the ongoing negotiations with the Chinese partner Dongfeng Motor, and a possible increase in terms of capital for the entry of new shareholders. However negotiations with Dongfeng are still in the preliminary stage and the results are not so obvious. According to analysts, the plan is for Dongfeng and the French State to take equal shareholdings of 20% in Peugeot's capital.
If this situation is going to materialize (it seems that Paris is willing to "accept" the Chinese, but not allowing them to go up to 30%), the result is a sensational turn with the majority stockholder (that is the Peugeot family) who would drop by up to 15 % losing the status of a major shareholder.
The increase in capital should be around 3.5 billion Euro with Dongfeng and PSA that are considering new industrial and commercial projects which would give them the opportunity also to strengthen activities in the emerging markets of Southeast Asia and South America.
The leaders of the French Group (which in 2014 will be led by Carlos Tavares) have also decided to devalue the assets of the automotive division for 1.1 billion euros due to the negative impact of car markets, and the unfavourable currency context in Russia and Latin America. PSA, however, has stated that the devaluation will not lead to a worsening of the financial results.
At the same time, the PSA Group has also announced developments on the front of the alliance with General Motors. The two giants have reduced their forecasts on synergies, expected now at 1.2 billion dollars by 2018 compared to the previous 2 billions.
It seems definitely vanished one of the pillars of the agreement that led GM to hold a market share of 7 % of PSA, with the development of a new platform for B-segment models (project that PSA will develop alone).
PSA and GM have, however, anticipated a collaboration agreement for the producton of a new generation of commercial vehicles in the B segment that it will be introduced in 2016, while the agreement at the production level will allow to host a future crossover in the Sochaux plant. GM itself, if PSA would really welcome the arrival of Dongfeng and of the French State, would see its stakeholding reduced to 5%.