PSA Peugeot Citroen Studying New Projects with Partners

By David Pearson

PARIS--French car maker PSA Peugeot Citroen (UG.FR) reaffirmed Wednesday that it is studying new industrial and commercial projects with partners, and that discussions include finding ways for the cash-strapped group to finance these projects.

However, a spokesman for Europe's second-largest automotive group by volume wouldn't comment on an unsourced report in the Chinese Business Daily that Dongfeng Motor Corp. (0489.HK), China's second-biggest auto maker and one of Peugeot's two existing Chinese partners, stands ready to take a 30% stake in the family-controlled French group for $1.6 billion.

"We are studying several industrial and commercial projects with different partners," the spokesman said, and the financial aspects of these projects is part of these discussions. However, the talks are at a "very, very preliminary" stage, he said.

As sales have tumbled, Peugeot has explored various ways to raise cash and speed its development outside Europe. One option has been to deepen and broaden its industrial partnership with General Motors Co. (GM), according to people familiar with the matter. Another option has been to expand Peugeot's relationship with Dongfeng outside China, those people said earlier this year.

The talks have been underway for months, but as recently as the summer had slowed down. It is unclear if they have since accelerated.

Peugeot Chief Executive Philippe Varin said in an interview in July that the priority for his struggling company "is to deepen our industrial projects, either alone or with partners."

Dongfeng co-owns two vehicle-assembly plants with Peugeot in China, and people familiar with the matter told The Wall Street Journal earlier this year that a potential direct investment by Dongfeng in Peugeot has been discussed as part of a move to further cement their partnership.

--Sam Schechner in Paris contributed to this article.

Write to David Pearson at [e-mail]

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