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Chinese automaker Dongfeng invests in troubled PSA Peugeot Citroen

French carmaker PSA Peugeot Citroen has sealed a rescue deal with Chinese vehicle maker Dongfeng Motor.

China's Dongfeng Motors and the French government will each invest about 800m euros (£660m) in return for 14% stakes. Another 1.4bn euros will be raised from existing investors in Peugeot.

The deal is still subject to a shareholder vote but will provide cash to keep Peugeot afloat after government guarantees expire.

It will mean the end of control by the carmaker's founding family. Should the deal be approved, the Peugeot family's 25.4% stake will be diluted to 14%, matching that of the French government and the Chinese carmaker.

Europe's second-largest carmaker group also announced its latest financial results on Wednesday, warning that it may face losses until 2016.

Peugeot said its net loss narrowed to 2.32bn euros last year, compared to a 5bn-euro loss in 2012.

Sales also fell by 2.4% from a year earlier to 54.1bn euros, due to tepid demand for new cars in Europe.

Dongfeng said the deal would strengthen overseas cooperation to achieve the objective of selling 1.5 million vehicles under the Dongfeng, Peugeot SA and Citroën brands per year starting from 2020. 



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