China’s Dongfeng Motor will probably cut its stake in Peugeot owner PSA after hiring banks to review options, people knowledgeable with the matter stated, in a move that could ease the French automaker’s planned merger with Fiat Chrysler (FCA).
Dongfeng owns a 12.2% equity stake in the French automaker and would have about half of that in the combined entity established by FCA and PSA, which was declared in October a tie-up to form the world’s fourth-biggest automaker.
A smaller Dongfeng holding would probably help get the deal past U.S. regulators in the middle of trade tensions between the US and China, an issue which has raised questions about the Chinese firm’s next move since the PSA-FCA merger was declared.
Dongfeng, a long-standing partner of PSA, had sent banks a request for proposals to find out options for the stake several weeks ago, according to the sources. The company is now intending to present its board of directors a share sale plan in the coming days, one of them said.
Both companies, PSA and Dongfeng, have not commented on this issue yet.