China's Dongfeng company has confirmed it is buying a stake in struggling French carmaker PSA Peugeot Citroen as part of a larger rescue deal. The package will further dilute the influence of the Peugeot family owners.
China's second-biggest automaker, Dongfeng, announced that it was buying a 14 percent stake in the French car manufacturer PSA Peugeot Citroen, shelling out 800 million euros ($1.1 billion) to acquire the shares in question.
An investment of a similar size was to be made by the French government, with additional money expected to come from existing investors. The reshuffle in shareholder stakes will decrease the control of the Peugeot family owners over the running of the French carmaker.
Dongfeng's move reflected an increasingly popular strategy among Chinese companies of buying stakes in established foreign brands to improve their competitive edge in their fast-growing home market.
Dismal business figures
The objective is for PSA and Dongfeng to sell 1.5 million vehicles annually under their individual brands by 2020, with the two carmakers seeking to expand into new markets and increase exports from a joint venture company in China to the Asia Pacific region.
Though PSA is France's biggest automaker and Europe's second-largest after Germany's Volkswagen Group, it has little presence in East Asia and the US.
PSA's global sales tumbled for a third consecutive year in 2013, falling by 4.9 percent to 2.8 million units. Fresh figures published Wednesday indicated that the company had logged losses to the tune of 2.3 billion euros last year, with year-on-year revenues down by 2.4 percent.
hg/mkg (dpa, AP)