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    489   CNE100000312

DONGFENG MOTOR GROUP COMPANY LIMITED

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Delayed Hong Kong Stock Exchange  -  04:08 2022-08-15 am EDT
4.980 HKD   -3.30%
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Peugeot mulls Faurecia sale with Dongfeng tie-up - sources

11/15/2013 | 12:10pm EDT
The Peugeot logo is seen at a dealership of French car maker PSA Peugeot-Citroen in Selestat

LONDON/SHANGHAI (Reuters) - French carmaker PSA Peugeot Citroen (>> PEUGEOT) is preparing for a possible sale of its Faurecia (>> FAURECIA) components division to accompany a tie-up with China's Dongfeng Motor Group, several sources with knowledge of the situation said.

LONDON/SHANGHAI (Reuters) - French carmaker PSA Peugeot Citroen (>> PEUGEOT) is preparing for a possible sale of its Faurecia (>> FAURECIA) components division to accompany a tie-up with China's Dongfeng Motor Group, several sources with knowledge of the situation said.

The separately listed parts maker has hired an adviser to explore the sale of Peugeot's 57 percent stake either in the market, or to a private equity fund or industry peer, said the sources, who asked not to be named because the talks are private.

Discussions are at a very preliminary stage, they said, and remain conditional upon the success of complex negotiations on Peugeot's deeper tie-up with its existing Chinese partner.

Talks on a 3 billion euro ($4 billion) capital increase, in which the French government and Dongfeng (>> Dongfeng Motor Group Co. Ltd) would each acquire 20-30 percent of Peugeot, are progressing more slowly than the troubled carmaker initially hoped, people with knowledge of the situation said last month.

Little progress has been made since then, they added this week.

"The talks look pretty much stuck in the mud," one of the people said.

Peugeot and Faurecia both declined to comment on Friday.

The French carmaker is "very eager" to sell a significant stake to its Chinese partner, but Chairman Xu Ping is not yet convinced, a source close to Dongfeng said.

Dongfeng would want a stake purchase to yield deeper strategic benefits than Chinese rival SAIC (>> SAIC Motor Corporation Limited) gained from a minority holding in General Motors' (>> General Motors Company) South Korean division, formerly Daewoo, the source said.

"Dongfeng doesn't want to be a passive investor," the source said.

Peugeot is reluctant to sell Faurecia because the profitable company, which is based in the western Paris suburb of Nanterre and has a market value of 2.5 billion euros, helps to support the carmaker's credit rating.

PRIVATE EQUITY INTEREST

But the disposal might be necessary to win European Union approval and French political acceptance for another government bailout. France granted 7 billion euros ($9.4 billion) in loan guarantees to prop up Peugeot's financing arm last year.

Private equity funds including Carlyle (>> Carlyle Group LP), KKR (>> KKR & Co. L.P.), CVC <CVC.UL> and Bain are looking at Faurecia, two sources said, emboldened by a buoyant debt market and the scarcity of deal opportunities in Europe.

KKR declined to comment. Carlyle, CVC and Bain did not return calls and messages seeking comment.

Shares in Peugeot and Faurecia both extended gains after the Reuters report. Faurecia closed 1.9 percent higher, while Peugeot added 1.7 percent, giving it a market value of 3.6 billion euros.

Peugeot is also still in talks to merge its Banque PSA financial arm with Banco Santander's (>> Banco Santander, S.A.) car loans business in a deal it hopes to sign in the first quarter of 2014, said a source with direct knowledge of the matter.

The transaction is taking time because of legal complexities and Santander's reluctance to take on Banque PSA's existing loan book, according to people familiar with the situation.

The Spanish bank would prefer to limit the combined operations to new lending, one said.

"Santander knows they are the only contender for a deal of that scale, so they have no incentive to compromise," the person said.

(Writing by Laurence Frost; Editing by James Regan)

By Sophie Sassard and Norihiko Shirouzu


© Reuters 2013
Stocks mentioned in the article
ChangeLast1st jan.
BANCO SANTANDER, S.A. -1.09% 2.6375 Delayed Quote.-9.32%
DONGFENG MOTOR GROUP COMPANY LIMITED -3.30% 4.98 Delayed Quote.-20.52%
FAURECIA SE -1.67% 17.4 Real-time Quote.-53.32%
GENERAL MOTORS COMPANY 2.65% 39.48 Delayed Quote.-32.66%
PEUGEOT SA -4.21% 21.85 End-of-day quote.-2.32%
SAIC MOTOR CORPORATION LIMITED 0.18% 16.39 End-of-day quote.-20.55%
STELLANTIS N.V. 0.99% 14.832 Delayed Quote.-11.11%
THE CARLYLE GROUP INC. 2.47% 35.2 Delayed Quote.-35.88%
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Financials
Sales 2022 117 B 17 359 M 17 359 M
Net income 2022 12 034 M 1 785 M 1 785 M
Net Debt 2022 10 403 M 1 543 M 1 543 M
P/E ratio 2022 3,20x
Yield 2022 9,76%
Capitalization 38 170 M 5 661 M 5 661 M
EV / Sales 2022 0,41x
EV / Sales 2023 0,41x
Nbr of Employees 122 061
Free-Float 30,3%
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Number of Analysts 14
Last Close Price 4,43 CNY
Average target price 6,65 CNY
Spread / Average Target 50,2%
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Managers and Directors
Qing Yang President & Executive Director
Wei He Chairman-Supervisory Board
Yan Feng Zhu Chairman
Jun Yu Head-Organization & Information Department
Guo Yuan Liu Head-Technical Development Department
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