Published on August 19th, 2019 | by Daniel Sherman Fernandez0
Dongfeng is feeling the sales slump and wants to sell down
Dongfeng might sell its USD2.5 billion shares in PSA Group
Dongfeng, which has a Chinese joint venture with PSA, plans to coordinate with the French company if it decides to sell down so that it can preserve a good working relationship, they said. Deliberations are at an early stage, and there is no certainty they will lead to a deal.
Dongfeng Motor is exploring options for its USD2.5 billion stake in PSA Group including a potential sale as the global slowdown in the auto market pushed profits down.
The Chinese state-owned automaker held talks in recent weeks with potential advisers about ways to monetize part or all of its 12.2 percent stake in Peugeot.
As part of the strategic review, Dongfeng has discussed possible transactions including a straight sale of PSA shares or issuing exchangeable bonds backed by PSA stock.
The funds would allow Dongfeng to invest in other areas at a time when its rivals are spending billions on electric vehicles and autonomous driving systems.
Dongfeng may hold onto part of its stake in PSA to potentially benefit from future industry consolidation, the people said. PSA said in May that it is open to “any opportunities” to create long-term value amid reports of tie-ups with other automakers.