PSA may sell Faurecia as part of tie-up with Dongfeng

Article by Anita Panait, on November 18, 2013

PSA/Peugeot Citroen may sell its Faurecia components division to accommodate a partnership with Chinese carmaker Dongfeng Motor Group, several sources privy with the matter told Reuters. Faurecia has already tapped an adviser to explore the sale of Peugeot's 57-percent stake either in the market, or to a private equity fund or industry peer, according to the sources, who said that talks are still at a very preliminary stage and is conditional on the success of complex negotiations on the French carmaker's deeper alliance with its Chinese partner.

PSA is currently holding talks over a EUR3 billion ($4 billion) capital increase, in which the French government and Dongfeng would each acquire 20-30 percent of the carmaker.

However, talks are progressing slower than hoped, people with knowledge of the situation said in October. Last week, they said that little progress has been made since then. "The talks look pretty much stuck in the mud," one of them remarked. While PSA is "very eager" to sell a significant stake to its Dongfeng, Chairman Xu Ping is not yet convinced, according to a source close to the Chinese carmaker.

The source said that Dongfeng would want a stake buy that would result to deeper strategic benefits than what local rival SAIC gained from buying minority holding in General Motors' South Korean division, formerly Daewoo. The source said that Dongfeng doesn't want to be "a passive investor.  PSA is unwilling to sell Faurecia since the profitable parts supplier helps to support its credit rating.

Topics: psa, faurecia

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