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Dongfeng extends China JV with Peugeot despite stake sale

China's Dongfeng Motor Group Co. Ltd. said it is extending business cooperation with Peugeot SA despite reducing its stake in PSA to facilitate the French carmaker's megamerger with Fiat Chrysler Automobiles NV, Reuters reported Dec. 19, citing a statement from Dongfeng.

Dongfeng reportedly said that under the extension, their joint venture Dongfeng Peugeot Citroen Automobiles could get the rights to PSA's new brands in China and will benefit from new technologies and intellectual properties.

As part of the FCA-PSA merger, Dongfeng cut its stake in Groupe PSA to 9% from 12.36%, or to 4.5% in the proposed merged entity. Under the deal, it has the option to sell another 2.5% stake in the merged entity to entities owned by the Peugeot Family.

Analysts reportedly said the stake sale could help ease the process of gaining regulatory approval for the merger in the U.S., according to Reuters.