Slaughter and May, Hong Kong, is advising China's second largest automaker, Dongfeng Motor Group Company Limited (Dongfeng) on its subscription for shares in Peugeot S.A. (Peugeot) for approximately EUR 800 million (US$1.1 billion), and its further strategic partnership with Peugeot to enhance their collaboration in research and development and to establish a new joint venture to drive PSA Peugeot Citroën and Dongfeng vehicle sales in the rest of Asia. This will be the largest overseas acquisition by a Chinese automaker since 2010.

Dongfeng has signed a memorandum of understanding with Peugeot which contemplates the entering into a master agreement, a subscription agreement and a shareholders agreement with, among others, Peugeot in connection with its equity investment in Peugeot. It has also signed a Non-binding Framework Agreement with Peugeot in connection with their further strategic cooperation.

These agreements, subject to shareholders' approval in the second quarter of 2014, will strengthen and deepen the existing 22 year industrial and commercial partnership between Dongfeng and PSA Peugeot Citroën whose 50/50 joint venture in China, Dongfeng Peugeot Citroën Automobile (DPCA) was established in 1992 and was further strengthened through a partnership agreement in 2010. With their two brands, Dongfeng Peugeot and Dongfeng Citroën, DPCA sold approximately 550,000 vehicles in 2013.

Dongfeng, which has a market capitalisation of US$13 billion and is listed on the Hong Kong Stock Exchange, is principally engaged in the manufacture of commercial vehicles (including trucks and buses), passenger vehicles (including basic passenger cars, MPVs and SUVs), engines and other auto parts. Dongfeng intends, through the agreements, to enhance its capability in the areas of research and development and manufacturing in relation to passenger vehicles as well as realise the cooperation between Dongfeng and PSA Peugeot Citroën in the international market.

Slaughter and May advised Dongfeng on its global offering and ground-breaking listing (for a company whose business is conducted principally through jointly controlled entities) on the Hong Kong Stock Exchange in 2005.

PSA Peugeot Citroën, the two hundred year old French carmaker and second largest carmaker in Europe, had a revenue of EUR 54 billion in 2013. PSA Peugeot Citroën is engaged in manufacturing automobiles and light commercial vehicles, and is listed on NYSE-Euronext Paris. In 2013 they sold 2.8 million vehicles worldwide.

CONTACTS

Corporate and Commercial: Benita Yu (partner), Frank Bi (associate), Kevin Ip (associate)