{{Peugeot Citroën, which has been manufacturing automobiles in France for over 100 years, has agreed to a deal that will see both the French government and Chinese carmaker Dongfeng buy large stakes in the struggling company.}}
Peugeot announced on Wednesday that its board had approved the agreement, in which the French government and Dongfeng will each invest 800 million euros ($1.1 billion) in exchange for 14% stakes in the company.
The move marks a huge transition for the carmaker, which up until now, has been controlled by the Peugeot family.
Under the agreement, the family’s 25% stake and 38 % of voting rights will now be reduced to equal both the French government and Dongfeng’s stake in the company.
The deal is crucial for Peugeot, which has struggled to stay afloat in recent years. Despite being France’s number one carmaker and the second largest in Europe, the company has been hit hard by poor sales, losing 5 billion euros in 2012 and cutting thousands of jobs.
The agreement will not only provide the company with much needed capital, but also hopefully expand its global presence, particularly in Asia.
Dongfeng said it and Peugeot will expand cooperation in technology, research and development, manufacturing and overseas distribution. It said the two sides will sign a formal agreement in March and continue work on their strategic partnership.
Dongfeng, which is based in the central Chinese city of Wuhan, is one of China’s biggest auto producers but is largely unknown abroad.
In addition to its joint venture with Peugeot, it assembles vehicles for Japan’s Nissan Motor Co. and Honda Motor Co. and manufacturers cars and trucks under its own name.
Total auto sales in China rose last year by 15.7% despite a steady decline in growth in recent years. Growth is expected to fall further this year to 8 to 10%, still well above levels forecast for the United States, Europe and Japan.
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