AutoBeta(AutoBeta.net)09/24 Report--

Dongfeng Motor, as one of the major shareholders of PSA, has played an important role since the merger of PSA France's Peugeot Citroen Group and FCA Fiat Chrysler Group. A few days ago, PSA Group announced that PSA has repurchased 10 million PSA common shares from Dongfeng Motor Group Co., Ltd.

According to the PSA Group, the repurchase price is 16.385 euros per share, with a total purchase price of 163.85 million euros (excluding related fees), or about 1.3 billion yuan. With the completion of the deal, PSA Group's plan to buy back 10 million shares held by Dongfeng Group is finally coming to fruition. Under the PSA share buyback plan, the above shares will be cancelled after the settlement and delivery of the transaction on September 25, 2020.

According to the previous repurchase agreement signed between PSA Group and Dongfeng Group, Dongfeng Group will sell a total of 30.7 million shares to PSA, changing it from the first largest shareholder to the third largest shareholder, which will help promote US regulatory approval for the merger of PSA and FCA, so as to promote the merger of PSA and FCA. And this share repurchase plan is also the implementation of the share repurchase agreement signed by the two previously.

However, the current deal is only part of the agreement. According to the agreement between the two sides, Dongfeng will reduce its stake in PSA Group by 30.7 million shares by 2022, while 10 million shares are about to be completed. After the completion of the transaction, Dongfeng Motor still holds 20.7 million shares of PSA Group to be reduced. It means that Dongfeng will sell the remaining 20.7 million shares to PSA Group, the only third party or several third parties in the remaining time. After the full reduction, Dongfeng Motor's shareholding will be reduced to 9.14 per cent, becoming the third largest shareholder in PSA and 4.5 per cent in the new group.

It is worth noting that Dongfeng Group can get about 679 million euros based on the previous repurchase price. But Dongfeng Group hasn't had time to sell its shares. Affected by the global COVID-19 epidemic, the share price of PSA has fallen sharply in the capital markets from 22 euros per share at the end of 2019. Dongfeng has reduced its holdings by 10 million shares and its earnings have shrunk by nearly 25 per cent.

In this regard, PSA Group also said that it and Dongfeng Motor have revised the share repurchase agreement previously signed between the two sides. After the amendment, if Dongfeng Motor does not sell the remaining 20.7 million PSA shares agreed in the share repurchase Agreement to PSA, or to only third parties, or to more than one third party before December 31, 2020, Dongfeng Motor shall sell the above 20.7 million PSA shares to one or more third parties through one or more transactions before the end of 2022.

Some industry insiders have analyzed that this is also to allow Dongfeng Group to have the right to sell to third parties at any price during the entire delivery period of PSA and FCA, giving Dongfeng Group the initiative in exchange for a more favorable market window and creating better profits.

Industry insiders also pointed out that, after all, Dongfeng Group has been seriously affected by the epidemic this year, and its profits have declined obviously. at the same time, its high-end new energy brand Lantu also has certain capital demands. therefore, this partial reduction is conducive to Dongfeng Motor to lock in existing investment income, which is in line with business logic.

According to the 2020 report of Dongfeng Group, revenue in the first half of the year was 50.576 billion yuan, up 4.4% from the same period last year, and the profit attributable to equity holders of the parent company was 3.018 billion yuan, down 64.5% from the same period last year.

Dongfeng Group sold a total of 1.1445 million vehicles in the first half of the year, down 16.7 percent from the same period last year; the passenger car sector sold 882300 vehicles in the first half, down 22.2 percent from the same period last year, of which Dongfeng Nissan sold 437200 passenger vehicles, down 17.3 percent from the same period last year; and the commercial vehicle sector sold 262200 vehicles in the first half, up 9 percent from the same period last year.

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