French leading car maker PSA Peugeot Citroen on Wednesday approved an operation to raise its capital by 3 billion euros (4.1 billion U.S. dollars) in which China's Dongfeng and the French state will take stake in the group.
In line with its strategic plan "Back in the race," PSA "announced major operations projects, which aim to improve competitiveness, accelerate its globalization strategy and conquer emerging markets," the auto maker said in a statement.
After suffering losses recent years, PSA looked to bolster its financial assets by raising its funds by approving an alliance plan in which Dongfeng and the French state will each invest 800 million euros to hold each 14 percent stake of the France's leading auto manufacturer.
Furthermore, PSA said the new investment deal will contribute in strengthening the group's position in China, the southeast Asia and in Europe thanks to a strategic investment plan and expected boosted financial results and liquidity.
In a common communique, French Finance Minister Pierre Moscovici and Arnaud Montebourg, Minister of Industrial Recovery, hailed the PSA's new tie-up with Dongfeng that" will enable PSA to accelerate its international development and support its long-term growth."
"The capital increase will give the group a full financial capacity to implement its strategic development plan," the communique added.
Last year, PSA posted 2.4 percent decrease in its revenue to 54.1 billion euros with the automotive division contributed negatively to the group total revenue with 36.5 billion euros, down 4.8 percent from 2012. (1 euro = 1.37 U.S. dollar)