Dongfeng Motor Halts HK Trading Pending Announcement

11-Feb-2014 Intellasia | Bloomberg | 6:00 AM Print This Post

Dongfeng Motor Group Co. (489), the Chinese carmaker in negotiations to purchase a stake in PSA Peugeot Citroen (UG), halted trading of its stock in Hong Kong pending an announcement.

Trading in the stock was halted from 10:04 a.m. today, according to the Wuhan-based company’s statement to the Hong Kong stock exchange. A Dongfeng spokeswoman declined to comment beyond the statement.

Peugeot, Europe’s second-biggest carmaker, said last month that it’s in talks to sell stakes to Chinese partner Dongfeng and France’s government in an initial step of a 3 billion euro ($4.1 billion) capital increase to fund a reorganisation. The French company probably lost money for the second year in a row in 2013, according to analyst estimates, as industrywide car sales in Europe reached a two-decade low.

“It’s a very good opportunity for them to have a tighter, closer relationship with a developed country’s automaker,” said Jeff Chung, a Hong Kong-based analyst at Daiwa Securities Group Inc. ” That will help them to diversify geographical risk, product risk and also right now given that they have a lot of cash, Dongfeng Motor still has an upper hand in these negotiations.”

Peugeot said in January that it’s targeting a formal deal with Dongfeng and France by the time the company reports full-year earnings on February 19. The company hasn’t specified the size of the potential stakes Dongfeng and the French state may buy.

Peugeot and Dongfeng opened their third joint assembly plant in July to produce four models in the country. Peugeot also has a Chinese factory with Chang’An Automobile Group to make DS models. Peugeot plans to have production capacity for 950,000 vehicles in the country by 2015.

“If we invest in Peugeot, it’ll bring benefits such as technology and other resources that will help us develop our own cars,” Dongfeng general manager Zhu Fushou said in an interview last month in Beijing. “Peugeot’s main problem is its heavy reliance on Europe, which it should address by shifting focus to emerging markets.”


Category: Hong Kong

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