Dongfeng Motor Group may cut its stake in Groupe PSA following a drop in share prices triggered by the coronavirus.
As part of an industry-shifting merger between PSA and Fiat Chrysler Automobiles (FCA), Dongfeng agreed to lower its 12.2 percent stake in PSA by selling 30.7 million shares to help smooth the process. The Chinese automaker’s stake was worth around 680 million euros ($744 million) at the time the merger was announced and would leave Dongfeng with a 4.5 percent stake of the merged PSA-FCA entity.
Also Read: PSA Group Helping To Build 50,000 Ventilators In France
However, in a recent earnings call followed by Reuters, a Dongfeng official said changes could be made to the plan.
“There are possibilities that the stake sale plan will change. We are evaluating the issue. This is closely related to their (PSA’s) merger talks with FCA, so we are also in close talks with them,” the official said.
Dongfeng, PSA, and FCA are not commenting on the possible changes, meaning it is unclear how Dongfeng could alter its sale plan.
One thing we do know is that Dongfeng and PSA plan to cut jobs at the Dongfeng Peugeot-Citroen joint venture in Wuhan, China in a bid to make the PSA and FCA joint venture more profitable.
When the merger was first announced in December, PSA and FCA said they expected it to close in 12 to 15 months once it receives regulatory approval. It remains unclear if the coronavirus pandemic will drag out this process.
