19 February 2014
Clifford Chance advises Dongfeng Motor Group on acquisition of a strategic stake in PSA Peugeot Citroen
Beijing, Paris, Shanghai: Leading international law firm Clifford Chance has advised Dongfeng Motor Group Co. on its proposed equity investment in PSA Peugeot Citroen Group, Europe’s second-biggest car maker. In a signed memorandum of understanding (MOU), Dongfeng and the French Republic will inject approximately €1.6 billion in PSA. After closing, Dongfeng, the French Republic and the Peugeot family will hold the same number of shares in PSA respectively. This transaction will be made in the context of a € 3 billion capital increase by PSA comprising a € 1.05 billion reserved capital increase and a € 1.95 billion rights offering. PSA will also issue warrants to existing shareholders. In parallel there will be an extension of the ongoing cooperation between Dongfeng and PSA which have established their first China joint venture in 1992. The transaction is subject to the parties signing binding final documentation, obtaining approvals from the relevant regulatory authorities, as well as approval by the extraordinary general meeting of PSA shareholders.
Dongfeng Motor Group Co. is one of the largest automobile manufacturers in China and is listed on the Hong Kong stock exchange. It has major production facilities located in Shiyan, Xiangyang, Wuhan and Guangzhou. Its business scope includes manufacturing, sales and R&D of commercial vehicles, passenger vehicles, auto parts and components, vehicle manufacturing equipment and other auto-related business. Dongfeng and PSA have been joint venture partners in China for more than 20 years. The strategic alliance aims at broadening the scope of their historic joint venture and strengthening cooperation in technology research and development, procurement, manufacturing, marketing and other areas.
Corporate partner Tim Wang who co-led the transaction in China commented, "We are proud to have taken part in this Franco-Chinese ground breaking transaction by advising Dongfeng on its strategic investment in PSA. We are delighted to have our global network advise Dongfeng in this complex deal."
Corporate partner Kelly Gregory who also co-led this transaction added, "These alliances offer world-leading corporations like PSA Peugeot Citroen attractive opportunities to expand their presence in China and strengthen their brands among Chinese consumers."
Corporate partner Thierry Schoen added, "We see a rising amount of cross-border M&A business activity between China and France that is indicative of a flourishing relationship. Dongfeng's investment in a world-leading automotive company marks a new era in global cooperation between Chinese and French industry heavyweights."
The Clifford Chance China team comprised Corporate partners Tim Wang and Kelly Gregory, supported by senior associates Yang Yi and Zhang Hong in Shanghai. The Clifford Chance France team was led by Corporate partner Thierry Schoen, supported by counsel Arnaud Félix and Sue Palmer in Paris. Emmanuel Durand, Paris Antitrust partner also advised on the transaction.