Dongfeng to reduce PSA stake in merger deal with Fiat-sources

China's Dongfeng Motor will have a reduced stake of around 4.5% in the new group resulting from the merger between Peugeot owner PSA and rival Fiat Chrysler, two sources said on Tuesday. Earlier the board of PSA approved a binding memorandum of understanding for a $50 billion tie-up between the two groups.

Dongfeng has a 12.2% equity stake in PSA and under a preliminary agreement announced in October would have had about half of that in the combined entity with FCA. According to the binding deal approved by the PSA board on Tuesday, FCA's robot unit Comau will remain within the combined group rather than being spun off as was originally planned in October, the sources said.

The two groups will then jointly decided on how to extract value from Comau.