[ET Net News Agency, 20 December 2019] Dongfeng Motor Group (00489) announced its plan
relating to the merger of PSA and FCA. Post the PSA-FCA combination, Dongfeng will own
4.5% in the newly merged company.
Meanwhile, Dongfeng and PSA have also agreed that PSA will repurchase 30.7m shares of
PSA from Dongfeng. Dongfeng currently owns 110.6m shares of PSA and will own 79.9m shares
(9.14%) of PSA after the transaction.
Morgan Stanley believes Dongfeng may book the gain through selling PSA's shares as the
book value of the shares is lower than the prior closing price of PSA. The research house
also believes the cash received from selling PSA's shares will be positive for Dongfeng's
cash flow.
Morgan remains "overweight" on Dongfeng, with an unchanged target price of HK$11. (KL)