Peugeot Confirms Studying Capital Increase, New Projects With Dongfeng

    By David Pearson 
 

PARIS--French car maker PSA Peugeot Citroen (UG.FR) confirmed Thursday that it is studying an eventual capital increase and that it is talking to other possible partners, including China's Dongfeng Motor Group Co. (0489.HK), about new industrial and commercial projects.

Peugeot has been widely reported as considering a substantial capital increase of around 3 billion euros to be able to fund its future development outside the European automobile market, which has been crippled by a six-year downturn. The plan, according to people familiar with the matter, is for Dongfeng and the French state to take equal shareholdings of 20% in Peugeot's capital. The capital increase would have a portion reserved for existing shareholders, according to one source.

The company said there has been no agreement on the terms of eventual projects and gave no details of the planned capital increase, saying the discussions are at a preliminary stage and there is no guarantee that they will be concluded.

People familiar with the discussions said financially fragile Peugeot and its longstanding partner Dongfeng want to give their industrial and commercial partnership in China a new dimension, sharing costs as they seek to expand into fast-growing emerging markets in Southeast Asia and Latin America.

Write to David Pearson at [e-mail]

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