China's Dongfeng and Peugeot to agree on capital tie-up-source

SHANGHAI Mon Feb 17, 2014 8:59pm EST

SHANGHAI Feb 18 (Reuters) - China's Dongfeng Motor Group Co Ltd and PSA Peugeot Citroen will sign a memorandum of understanding on a capital tie-up between the two carmakers later on Tuesday, a Dongfeng source told Reuters.

The source said the non-binding agreement would involve Dongfeng and the French government each injecting 800 million euros ($1.10 billion) for 14 percent stakes in the French carmaker.

The fundraising by PSA would total 3 billion euros after selling new shares to existing shareholders, said the source, who declined to be identified because the information is not yet public.

($1 = 0.7298 euros) (Reporting by Samuel Shen and Kazunori Takada; Editing by Paul Tait)