Chinese rumors: Dongfeng ready to pay 10 billion for 30 percent of PSA – in Chinese money

Chinese abacus 2 - Picture courtesy

It’s interesting to see how different cultures react to the same non-news: In Europe the continuous drip of remarks about a possible partial sale of PSA to China’s Dongfeng is being met with Gallic shrugs, or whatever shrugs they have in other parts of Europe. The blasé EU thinking is that it’s a PR maneuver to cow the French government and the French unions into accepting painful cuts to ward off the yellow peril.  Steve Girsky’s recent remarks to Reuters,  in which he said that GM won’t  be in the way should PSA couple with Dongfeng, fit into this scenario. GM wants the European bleeding stopped, it doesn’t want a new competitor in China.  The Chinese have a completely different view.

In China, where most of the automotive media runs on rumors, the story is making the rounds that Dongfeng is ready to pay 10 billion RMB for 30 percent of PSA. Where did that come from? Straight from the stock charts.  It goes like this: Today, PSA’s market cap is 4.23 billion EUR. 10 billion RMB convert to 1.2 billion EUR. 30 percent of 4.23 billion EUR are, e voila, 1.27 billion EUR. Apparently, the rumor mill thinks PSA can be had for slightly less than the going price – but then, which Chinese pays full retail?