Under heavy pressure, Peugeot Citroen Group (PSA) is looking for buyers everywhere, and China's second-largest auto group Dongfeng Motor is one of the potential buyers.
Yesterday, Dongfeng Motor insiders confirmed to reporters that the company had initiated preliminary discussions with PSA with the intention of acquiring PSA's 30% stake at RMB 10 billion. However, the person stressed that the current "still in the initial stage" and the future there is uncertainty.
This news was first reported on an investor conference call on September 29. Dongfeng Motor’s relevant person stated in the conference call that the company had hired an investment bank to implement the plan and initially planned to purchase 30% of PSA’s equity at a price of RMB 10 billion. The person said that although the two parties have started discussions, Dongfeng Motors has been more cautious.
A person involved in the meeting told reporters that because PSA has formed a joint venture car company with Changan Automobile (Weibo) in China, Shanghai Automotive's partner General Motors is the second largest shareholder of PSA, and Dongfeng Motor is worried about the acquisition. Later will face complex domestic company relations.
However, the conference call of the Middle East Auto Group emphasized that for the purpose of protecting the profits of its joint venture company, Shenlong Motors and the Hong Kong listed company (Dongfeng Group, 00489.HK), the company still hopes that PSA will be “more stable†and “does not want joint ventures. get into trouble". Taking this into consideration, Dongfeng Motor is still actively studying this transaction.
PSA is the second largest automotive group in Europe and has been hit by the European debt crisis. PSA's 2012 financial report shows that the group's sales in 2012 were 55.446 billion euros, a decrease of 5.2% from the previous year; the net loss was 5.01 billion euros. In the past three years, PSA's global sales have been declining year by year, cumulatively reducing by approximately 17.5%.
The most pressing problem with the current PSA is the exhaustion of cash. At present, the Peugeot Citroën Group has lost an average of 7 million euros per day. As of the end of 2012, it has run out of cash reserves, total net debt is about 3 billion euros, and it is estimated that it will consume 1.5 billion euros in 2014. Since 2012, PSA has sold assets worth a total of 1.5 billion euros, including property and subsidiaries, and plans to close the Onai plant in France in 2014 and abolish 11,200 jobs in France.
"Dongfeng Motor must consider the risk, because PSA's stock price has begun to rebound, 30% of the equity to 10 billion yuan, from the valuation is not worthwhile." The above-mentioned participants said.
In March 2012, PSA issued new shares valued at 1 billion euros. It transferred 7% of its shares to 8.27 euros and a total price of 320 million euros to GM, which became the second largest shareholder of PSA. In the following year, PSA's share price dropped by 50%, and in February this year, the value of PSA shares held by General Motors depreciated by 212 million euros. However, since April of this year, PSA shares have risen by the lowest point of 5.35 euros/share. As of the most recent trading day, PSA's share price was 12.41 euros/share.
Although the PSA's global performance has fallen sharply, the performance of the Chinese market has never been better. In the first half of this year, PSA's joint venture company in China, Shenlong Motors, sold a total of 276,900 vehicles, an increase of 32.7% year-on-year; and realized sales revenue of 30.7 billion yuan, a year-on-year increase of 43%. From May of this year, China became the largest single market for PSA in the world. .
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