BRUCE GAIN

Will PSA have a Chinese chairman?

Bruce Gain is an Automotive News Europe correspondent in France.Bruce Gain is an Automotive News Europe correspondent in France.
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A split in the Peugeot family over whether to invest more money in PSA/Peugeot-Citroen has led to fears that the French automaker could have a Chinese chairman, a scenario described by business daily La Tribune as "sacrilege."

PSA is said to be discussing a capital increase of 3 billion euros. The automaker's Chinese partner Dongfeng Motor and the French government would each pay 1.5 billion euros for stakes of between 20 percent and 30 percent.

If Dongfeng ends up with a higher stake than the Peugeot family's 25 percent holding, the Chinese automaker could claim the chairmanship of PSA's supervisory board, La Tribune speculates. Traditionally, a Peugeot family member chairs the automaker's board. Thierry Peugeot has had the role since 2002.

Part of the new capital would be raised through a rights issue in which the Peugeot family would sell new stock to the French government. The remainder would be raised in a reserved capital increase. The move would dilute the Peugeot family's stake. The family likely doesn't have the funds to subscribe to the capital increase, French press reports have said.

"Some family members want to participate and others accept that their ownership stakes would be more diluted," says Gaetan Toulemonde, a Deutsche Bank analyst.

A capital investment with Dongfeng offers limited synergies, Toulemonde said. PSA would benefit more by expanding its partnership with General Motors, such as sharing more production with GM's Opel brand. "The best solution would have been to get on better with GM," he said. "But it doesn't look like GM wants to go deeper."

You can reach Bruce Gain at bgain@crain.com.

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