French automobiles manufacturer PSA Peugeot Citron has signed a memorandum of understanding with French government and Chinese automaker Dongfeng Motor Group under which each will inject EUR800m for 14% stakes.
Dongfeng Motor said in a filing to the Hong Kong Stock Exchange that the deal was signed to strengthen its co-operation in technology, research and development, manufacturing and overseas distribution with the French automotive firm, reported Reuters.
The rescue deal and an expected new lending partnership with Banco Santander is said to help the French carmaker survive the expiry of EUR7bn in state guarantees next year keeping its lending arm afloat.
The deal ends more than 200 years of effective control by the Peugeot family, whose 25.4% stake and 38% of voting rights will be diluted to parity with Dongfeng and the French state.
Earlier in October 2013, PSA announced that it is in talks to divest stake to Chinese partner Dongfeng and the French state, to raise as much as EUR3bn in a capital increase.
