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Christopher Bruce2013-07-02 14:18:23

Peugeot Family Willing to Cede Control to GM to Save Company

The family knows it will likely have to give up control regardless

 
 
Slideshow
Peugeot has been struggling for the last several years

The PeugeotPeugeotPeugeotFrance, 1882 > present120 models
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7 videos
family still holds a controlling stake in PSA Peugeot CitroënCitroënCitroënFrance, 1919 > present94 models
5546 photos
11 videos
but is considering ceding control to General MotorsGMGMUnited States of America, 1998 > present8 models
240 photos
in order to save the company. GM bought 7% of PSA in March 2012.

The problem with this deal is getting the French and German governments to accept it. If GM took control of PSA, it would likely want to consolidate factories and close factories in Germany and France, and that would likely be key to any deal that GM made with PSA.

This is not the first time that GM and PSA have discussed merging. Prior to buying 7% of the company, GM and PSA were negotiating a full merger that eventually fell through.

"GM faces the same overcapacity situation with OpelOpelOpelGermany, 1863 > present85 models
5172 photos
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, and that's why PSA is trying to convince them to merge the two. The Peugeot family has now accepted that they'll lose control, so this is no longer an issue," said an unnamed source close to the deal in an interview with Reuters.

PSA has cut 10,000 jobs and sold €2 billion in assets over the last year to stay afloat. It also received a €7 billion loan from the state. It posted a €5 billion loss in 2012, and its stock is currently trading at €5.94 ($7.73) per share. GM is trading at $34 (€26.15) a share.

Peugeot founded the company in 1810 as a coffee mill maker. The family owns 25.4% of the company’s stock and has 38.1% of its voting rights. It still has 77,000 workers in France split among five factories. 

Source: Reuters

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