US auto giant General Motors is in talks to buy out five percent of France's biggest car builder PSA Peugeot Citroën, business daily Les Echos reported on Tuesday citing several sources.

"/> US auto giant General Motors is in talks to buy out five percent of France's biggest car builder PSA Peugeot Citroën, business daily Les Echos reported on Tuesday citing several sources.

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GENERAL MOTORS

GM to take five percent stake in Peugeot: report

US auto giant General Motors is in talks to buy out five percent of France's biggest car builder PSA Peugeot Citroën, business daily Les Echos reported on Tuesday citing several sources.

GM to take five percent stake in Peugeot: report
Fabio Aro

Sources close to the negotiation said the deal was a so-called standstill agreement in which GM could not increase its stake in Peugeot without prior permission from the car group.

Last week French Labour Minister Xavier Bertrand revealed that GM and Peugeot were in talks towards a strategic partnership confirming a report on a website.

Contacted by AFP, Peugeot refused all comment.

Peugeot is France’s top car manufacturer, ahead of Renault, and Europe’s second, behind Volkswagen.

The Peugeot family controls 30.3 percent of the capital and 45.75 percent of voting rights in the firm which effectively took over French car manufacturer Citroen in 1976.

Last year, the firm, which employs 205,000 people worldwide, sold 3.5 million cars around the world, two-thirds of them in Europe where the market is under pressure as the economy slows sharply.

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GENERAL MOTORS

Peugeot-Citroën eyeing possible GM tie-up

French car maker PSA Peugeot-Citroën confirmed on Tuesday that "discussions are in progress" about a potential alliance. While the company declined to name the possible partner, several sources identified US car giant General Motors.

Peugeot-Citroën eyeing possible GM tie-up
Fabio Aro

Both French business website LaTribune and the Financial Times named the American company as the likely suitor, reporting that an agreement would see the two groups joining forces to build cars and components in Europe.

Any deal would likely fall short of a full merger with each company retaining its own brands.

On Tuesday Peugeot confirmed it was “looking at potential co-operations and alliances.”

“Discussions are taking place and there can be no certainty at this stage that these discussions will result in any agreement,” the company said in a statement.

Peugeot has been known to be in the market for a partner since 2009 when its chairman said the group would be open to an alliance.

Last week the company reported a loss of €497 million ($658 million) for the second half of 2011.

The PSA Peugeot Citroën group was created in 1976 when Peugeot acquired a majority stake in the then bankrupt Citroën. It is the world’s eighth-largest car maker in terms of sales.

General Motors is the world’s biggest car manufacturer and employs over 200,000 people.

Peugeot Citroën shares surged 9 percent on the news as the French stock market opened on Wednesday morning.

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