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No Mergers, Takeovers For Peugeot

Growth In New Markets Likely To Be Undertaken With Partners.
Idea That Family Control Might Be Diluted Takes A Beating.

Peugeot isn’t about to merge with another big company like Fiat, Ford Europe or BMW, but will seek partners to maximise sales in new markets.

Thierry Peugeot, chairman of the Peugeot supervisory board, had sparked speculation in an interview with Les Echos that the company might be willing to toss aside tradition, dilute the family power and seek equity alliances.

The Peugeot family controls 30 per cent of Peugeot shares and about 45 per cent of the voting rights.

A couple of days later at the company’s annual shareholders meeting new CEO Philippe Varin quickly stamped on this interpretation.  Although Peugeot wanted to be a major global player outside of its main European market, by growing in emerging markets through organic growth, and if necessary, new partnerships, this would be as an independent family held company, according to Nomura International analyst Jeremie Papin.

Peugeot has partnership deals with Toyota, Mitsubishi, Ford and BMW.

Peugeot won’t be taking the plunge into takeovers or mergers.

“The position on the group’s independence and necessary family control indicates to us very limited M&A possibilities,” Papin said.

“The group rightly knows that it doesn’t have the cash, nor the political backing to implement an ideal restructuring in Europe and participate in a restructuring of the European industry – Fiat’s great plan was just turned down by politicians. We rule out any agreement with Fiat, Ford Europe and BMW given the constraints over cash, political issues and the family’s position. We believe Peugeot’s partners will be in emerging markets and Asia,” Papin said.

Expect more detail on Peugeot’s strategy from CEO Varin’s presentation on July 29.

Neil Winton – June 15, 2009

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