France Says Peugeot Stake Deal Gets Initial EU Backing

PSA Peugeot Citroen (UG), Europe’s second-biggest carmaker, got initial regional regulatory backing on its agreement to sell a stake to its home government, a French official said.

French Finance Minister Pierre Moscovici received a letter from European Competition Commissioner Joaquin Almunia, who indicated that the proposal “at first glance” complies with European Union rules related to state aid, a ministry spokeswoman, commenting on condition of anonymity in line with government rules, said by phone.

Peugeot outlined plans yesterday for a 3 billion-euro ($4.11 billion) capital increase in which Chinese partner Dongfeng Motor Corp. and the French state will contribute about half the money in exchange for stakes of 14 percent apiece. The new funding will help the Paris-based manufacturer to overhaul its lineup, invest outside Europe and reduce debt.

Earlier financial backing for the carmaker includes a 7 billion-euro French government guarantee of new bonds issued by the company’s Banque PSA Finance car-loan unit. EU authorities have approved the guarantee.

French newspaper Les Echos reported on Almunia’s letter in its online edition late yesterday. Antoine Colombani, a spokesman for the European Commission in Brussels, didn’t immediately respond today to a call and an e-mail seeking comment.

To contact the reporter on this story: Mathieu Rosemain in Paris at mrosemain@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.