Dongfeng Decides Holding PSA, Share PercentageUndetermined

Last week, as reporter kwon from resource, Dongfeng has decided to take up PSA after serveraround stiff negotiation and price cut. However, details are still undetermined.

It has couple of versions about both sides share percentage from last year. As early as last June, Europe media start to cite insider of PSA that PSA considers about sell 30% share to Dongfeng for cash turnover. There are some media following step report that Dongfeng Group wants to buy out 30% PSA shares with 10 billion Yuan. The latest unconfirmed message is PSA argues with Dongfeng about some details, but framework is decided already. France government and PSA shall hold the some shares, which are 17.6% respectively. Another shareholder, GM, has sold out its 7% shares. Dongfeng and France government now are the biggest shareholders of PSA.

Details are undetermined yet, but what is sure that buy out price is the key agreement for both sides right now. Insider of Dongfeng says that “PSA asks for too much.”In the price negotiation, Dongfeng takes initiative. PSA bargainpower is narrowed around by around with its finance situation getting worse and worse.

On 17 Oct Wuhan Auto Forum, facing media question “PSA share buying”, ZHU Shoufu, general manager of Dongfeng Group says that it is time to discuss about the reasonability of the merge. As it known, Dongfeng entrusts an international investment bank to investigate the income and debt situation of different plate of PSA business.

As data showing, PSA global sales were 3.13 million in 2010. The figures slight dropped to 3.09 million in 2011. However, sales of 2012 suddenly dropped to 2.82 million, which breaks 3 million sales. The accumulated drop is up to 10.8%. Europe market shrinks about a quarter. In 2012, it appears as high as 5 billion Euro losses. PSA Faurecia and automobile finance still realize profit, but its current profit has more than 20% drops. Automobile department operation loss is up to 1.5 billion Euros, which is far more than 92 million Euro losses in 2011.

PSA implements server measures to get rid of straggle situation, which include layoff employment, sells branches shares and estate. In the first half year of 2013, Faurecia profit increases 5.7%, but combined net profit drops to 60 million Euros from 142 million Euro of last year. PSA shall shut down 8 seat plants in the next 4 years. Banque PSA Finance sales drop to 888 million Euro from 979 million Euro of last year. Current income drops 66 million Euro.