Moscow Times 20 September 2012
Russian Railways has entered into exclusive negotiations to buy PSA Peugeot-Citroen’s GEFCO logistics holding, after the French carmaker identified the rail monopoly’s bid as the most attractive, Russian Railways said Thursday.
The acquisition would be a significant boon to the Russian rail monopoly in its long-term goal of building an overland cargo route from China to Europe.
Russian Railways submitted an 800 million euro ($1 billion) bid for a 75 percent stake in GEFCO on Sept. 5, outbidding other suitors.
GEFCO, which ships Peugeot and Citroen cars around the world, is one of the struggling French carmaker’s only profitable divisions. PSA is selling the stake in an effort to alleviate growing debt.
PSA Peugeot-Citroen would receive a special dividend of 100 million euros from GEFCO as part of the deal, which is subject to approval by competition regulators in both countries.
Russian Railways said it intends to retain all of the company’s divisions, including those that provide services to PSA, and keep the same management in place if the deal goes through.
Christian Lafaye, a spokesman for the union representing PSA workers, said a debate is now under way about whether to sell 75 percent or 51 percent of the company, Reuters reported.
The acquisition was not included in Russian Railways’ investment program, and analysts say they expect the company to fund the deal by borrowing on the debt market.