[News] On March 28, the joint stock company of Automobile Group (hereinafter referred to as Dongfeng Group) and the group (hereinafter referred to as PSA) held a signing ceremony of the global strategic alliance agreement in Beijing.
In fact, on March 26, Paris time, Dongfeng Group, the French Republic, the Peugeot family company, and the PSA Group had officially signed various agreements in the capital increase plan in Paris.According to the agreement, Dongfeng Group will inject 800 million euros into PSA Group through private placement and rights issue subscription, holding 14%. This move will make it the largest shareholder of PSA parallel to the French government and the Peugeot family, with equal voting rights.
It is understood that the content of the in-depth cooperation between Dongfeng Group and PSA Group is mainly three aspects: first, the two sides will accelerate the development of Shenlong Automobile Company and increase its production and sales scale, which is expected to achieve an annual production and sales of 1.50 million vehicles in 2020; second, the two sides will jointly establish a research and development center in China, which will provide product development and technology services for high-growth markets; third, the two sides will also create a new joint venture company, responsible for the sales of vehicles produced by Shenlong Automobile Company and PSA Group in Asian markets outside the Chinese mainland.
Background of cooperation:
The cooperation between Dongfeng Group and PSA began in 1992. Over the past 22 years, the cooperation between the two parties has continued to deepen and expand. PSA Group, as the second largest automobile group in Europe, has been mired in the European debt crisis in recent years. In 2012, PSA Group lost 5 billion euros, which led to it having to cut down its workforce and seek government financial support. It also announced that it will close the entire vehicle plant in Oneissoubois, France, which produces in 2014. In 2012, there were also rumors that GM may reduce its stake in PSA Group. In the first 8 months of 2013, the cumulative registered sales in the 27 countries of the European Union were more than 7.84 million vehicles, down 5.2% year-on-year; Peugeot Citroen Group sold 1.0013 million vehicles, down 12.3% year-on-year, and its market share decreased from 12.1% to 11.2%, far exceeding the industry level.
At this stage, Dongfeng Group’s acquisition of part of Peugeot Citroen Group may achieve a win-win effect. First, the Chinese market will help to provide financial support for the European market where Peugeot Citroen Group has suffered serious losses. Second, Dongfeng Group is working hard to promote independent branding. Peugeot Citroen Group’s advantages in brand and technology may enhance Dongfeng Group’s brand recognition in further cooperation.
However, the cooperation between the two parties will also face certain difficulties. First, General Motors and PSA Peugeot Citroe ? n Group have formed an alliance, and General Motors holds a 7% stake in PSA Peugeot Citroe ? n Group. According to relevant regulations, if shareholders outside the Peugeot family hold more than 10%, General Motors can use the withdrawal vote, which may lead to Peugeot Group not being able to get more alliance benefits in the future. Secondly, in the cooperation between General Motors and PSA Peugeot Citroe ? n Group, Europe has become the focus of cooperation between the two parties, and the new partner may not be able to enter the European market in the future. These will affect the valuation of PSA Peugeot Citroe ? n Group
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Dongfeng Motor and PSA will hold a signing ceremony on March 28
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