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Peugeot Citroen close to Chinese investment deal

Monday - 1/20/2014, 5:10pm  ET

PARIS (AP) -- Out with General Motors Co., in with China's No. 2 automaker: PSA Peugeot Citroen is moving closer to a partnership with Dongfeng Motor.

Spokeswoman Antonia Krpina at the capital-hungry French automaker said Monday its supervisory board has reached "cohesion" in talks announced last month involving Dongfeng. She declined further comment, saying no deal has been signed yet.

In a statement later, Peugeot Citreon said negotiations are ongoing and it expects to make an announcement next month at its annual earnings presentation.

Peugeot Citroen said its "privileged scenario" foresees a capital increase of around 3 billion euros ($4.1 billion). The deal also could see the French government take a matching stake in the company alongside Dongfeng.

Last month, Detroit giant GM said it had decided to unload its 7 percent stake in the struggling French company, without disclosing a price, while maintaining their alliance.

Many acquisitions and corporate partnerships abroad by Chinese companies aim to improve their competitive edge in their fast-growing home market. A Peugeot tie-up would give Dongfeng access to a well-known brand and advanced technology to help expand its share of the world's biggest auto market.


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