Exclusive: China's Dongfeng plans partial sale of PSA stake – sources

By Kane Wu and Gilles Guillaume

HONG KONG/PARIS (Reuters) – China’s Dongfeng Motor will likely trim its stake in Peugeot owner PSA (PA:) after hiring banks to study options, people close to the matter said, in a move that could ease the French carmaker’s planned merger with Fiat Chrysler (MI:).

Dongfeng (HK:), a long-standing partner of PSA, has a 12.2% equity holding and 19.5% voting stake in the French carmaker.

Fiat Chrysler and PSA announced in October they would join forces in a 50-50 share merger to create the world’s fourth-largest automaker, seeking scale to cope with costly new technologies and slowing global demand.   

Shrinking Dongfeng’s stake could help get the deal past U.S. regulators, at a time of heightened trade tensions between Washington and Beijing.

Dongfeng had sent banks request for proposals to explore options for the stake several weeks ago, according to several sources. The company is now aiming to present its board of directors with a share sale plan in the coming days, one of them added.

PSA declined to comment while Dongfeng did not immediately respond to a request for comment.

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