French carmaker PSA Peugeot Citroen's board is set to review different formulas and techniques for the French state and China's Dongfeng to become the company's major shareholders.
According to the two sources familiar with the plan, several possible cases are put on the table on how to carry out the capital hike of around 3.5 billion euros ($4.7 billion). Peugeot is currently Europe's second-largest carmaker, and has been looking to secure a stronger beachhead in the car market by shoring up its finances.
The first and the most likely scenario under consideration would have had the French state and Dongfeng each deliver 1 billion euros to PSA. The Peugeot family holds 38 percent of the votes in the company, and the board informs that the remaining 1.5 billion would be offered publicly without involving the family.
According to one of the sources, a new consideration would have the French state, Dongfeng and the Peugeot family each invest the same amount, and the rest of the shares would be offered publicly.
The source states that the most likely amount each of the three would have to spend was 500 million euros. After the increase in market share, they each would possess a stake of 12 to 15 percent in the company.
Le Monde was first to report this consideration saying that the banks advising Peugeot believe it can place between 1.5 and 2 billion euros of shares on the market.
Dongfeng, for its part, has been observing the sensible reasoning of taking the stake in the company. Last month, it signed a $1.3 billion joint venture agreement with Renault, a move that would give Dongfeng a manufacturing presence in China after nearly a decade of not assembling vehicles there.
The outcome of last Sunday's board meeting was not certain, but the news helped increase Peugeot's share price, which jumped 2.2 percent to close at 11.48 euros.
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