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STOCK MARKET VIEW
Peugeot - Lion scratching for food
Peugeot deal gives short-term insurance, long-term doubts
Published: Thu, 30 Jan 2014 19:50:39 GMT
 

Peugeot 208 unveiling Geneva 2012

“Three-headed monster” or the “lion with three heads” - French Minister makes clear he will veto more moves out of France

The rescue plan for financially-troubled Peugeot-Citroën, which includes ceding stakes to the French state and Dongfeng Motor of China, will solve any short-term money worries, but risks making a long-term survival plan for the company much more difficult to implement. 

The €3 billion recapitalisation plan would result in Dongfeng, France, and the Peugeot family ending up with roughly equal 14 per cent stakes in Peugeot-Citroën.

These shareholders may have different, conflicting objectives. 

The French government will be anxious to avoid job cuts. 

Dongfeng might want to grab production for itself back in China. 

The Peugeot family, with its stake slashed from 25.4 per cent, will be anxious to carry out the reconstruction plan which depends on huge job cuts, and moving more production outside of high-cost France
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