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PARIS, Jan 29 (Reuters) - PSA Peugeot Citroen Chairman Thierry Peugeot has written to his cousin Robert Peugeot, head of the FFP family holding, to criticise a planned tie-up with China's Dongfeng Motor that would dilute the family's influence, Les Echos reported.
Peugeot's board earlier this month approved a tie-up underpinned by a 3 billion euro ($4.1 billion) capital increase that would also see the French government subscribe to the share issue on the same terms as Dongfeng.
"I am worried about the strategy of withdrawal from Peugeot that you seem to want to carry out," Thierry Peugeot said in the letter dated Jan. 27, which the business daily obtained and published on its website on Wednesday.
"I believe that the Peugeot family must continue to accompany Peugeot and not lose interest in it."
The Peugeot clan currently controls the carmaker through a 25 percent stake commanding 38 percent of voting rights, but the deal approved in principle by the board would give the family, French government and Dongfeng equal holdings, a source with knowledge of the matter has said.
With market conditions showing signs of improvement, Thierry Peugeot has pushed an alternative deal replacing the government's role with a bigger market issue, potentially allowing the family to remain the biggest shareholder, the source said.
"Shareholders and the market would today be able to fully support the capital increase that the group needs," Thierry Peugeot said in the letter.
While the difference between the two cousins over strategy has been widely known, the letter makes explicit Thierry Peugeot's objections to the plan.
Thierry Peugeot said the negotiations about the future of the carmaker had been carried out without the FFP's board and without direct contact between it and Dongfeng, leading to a "potentially very negative result" for the FFP.
Thierry and Robert Peugeot were not immediately reachable for comment. ($1 = 0.7329 euros) (Reporting by James Regan and Gilles Guillaume; Editing by Anthony Barker)