PSA/Peugeot-Citroen may announce as soon as this week plans to sell a stake of about 7 percent in the French carmaker to General Motors Co. as part of a development alliance, people familiar with the matter told Bloomberg.
The deal would involve a standstill agreement by which GM would not take a greater holding in the Paris-based carmaker without permission, said the people, who asked not to be identified because the talks are private. PSA may offer additional shares through a rights issue as part of the transaction, the people said.
Separately, Reuters cited sources saying that GM would likely buy a stake of less than 5 percent. Any purchase by GM would be "purely symbolic" to cement the commercial alliance, a source told Reuters. At PSA's current market value of $4.8 billion, a 5 percent stake would be worth $240 million.
A GM-PSA alliance may include developing engines and building vehicles together in the region, a person familiar with the situation said last week.
For GM, an alliance would provide a means to lower operating costs at its loss-making European unit, Opel/Vauxhall, while PSA would gain much-needed access to international markets at a time when auto sales in Europe are sagging, sources said previously.
PSA, which is heavily reliant on the French and European markets, has been under pressure to find a partner to broaden its presence around the world and gain access to growth markets like Latin America, China and Russia.
An industry banker, who declined to be identified because he was not authorized to speak with the media, said: "The challenge for Peugeot is that it's not in the U.S. market, one of the world's largest, and its presence in China is growing but still small."
The tie-up plan has met with some skepticism in the United States, with industry experts and analysts saying that for GM, the potential benefits from such an alliance are less clear.
PSA would bring well-regarded diesel engine and small engine technology to the table, but PSA is grappling with the same problems that Opel has and the planned tie-up does not help GM outside Europe, analysts said.