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Report: Dongfeng mulls stake cut in Peugeot

China's Dongfeng Motor Group Co. Ltd. plans to trim its stake in French carmaker Peugeot SA, Reuters reported Dec. 6, citing sources familiar with the matter.

The move is expected to help the maker of Peugeot and Opel vehicles ease its merger with Fiat Chrysler Automobiles NV, the newswire said. It was previously reported that Dongfeng was considering options for its $2.5 billion stake in Peugeot, including a potential sale.

The Chinese state-owned automaker, which holds a 12.2% stake in Peugeot, reportedly tapped banks to explore options for the stake several weeks ago. Dongfeng is expected to present a share sale plan to its board of directors "in the coming days," the newswire said.

Dongfeng would have about half of its present stake in Peugeot in the combined entity formed by Fiat Chrysler and Peugeot, according to the report. The Chinese company is seeking to reduce its stake in the merged company to a level that would be acceptable to the Committee on Foreign Investment in the United States as a smaller holding is believed to help get the deal past U.S. regulators amid trade tensions between the U.S. and China.

A stake of more than 5% in the new company, however, could allow Dongfeng to get a seat on the board, Reuters reported.

Dongfeng and Peugeot did not immediately respond to S&P Global Market Intelligence's requests for comment.