Dongfeng Motor Corp, China’s second-largest vehicle producer, has agreed to buy a 14.1 percent stake in French automaker Peugeot Citroen for 800 million euros (US$1.09 billion). This is the largest foreign acquisition by a Chinese State-owned company to date.
The deal ends the Peugeot family’s dominance of the company. Dongfeng, the French government, which is also expected to acquire 14.1 percent, and the family will each have the same number of shares and voting rights.
The automaker has gone through difficult times largely due to its over-dependence on the European market. The company went through restructuring to reduce cost and diversify its business, particularly outside of Europe. China has emerged as a bright spot.
In 2014, Peugeot expects sales to grow about 2 percent in Europe and about 10 percent in China. The company plans to “increase its production capacity to 750,000 units in China by 2015 and to double its network of dealers in the Chinese market,” Philippe Varin, chairman of the Peugeot Citroen tells China Daily.
“The alliance with Peugeot is expected to give Dongfeng access to Peugeot’s technology and to its European distribution network, catapulting a company that is little known outside of its home market onto the international stage,” reports The New York Times.
The deal, which still requires approval by regulators in their respective countries, is expected to close before April 30.
photo credit: peugeot