China's Dongfeng Motor will have a reduced stake of around 4.5 percent in the new group resulting from a merger between Peugeot owner PSA and rival Fiat Chrysler Automobiles, two people familiar with the matter told Reuters 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 percent 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.
Dongfeng is poised to sell some of its shares to a French investor, people familiar with the matter told Bloomberg. The potential buyer is not a French state-owned entity nor the Peugeot family, said one of the people, who also asked not to be named because the information isn’t public.
Representatives of Dongfeng, PSA and Fiat declined to comment. Dongfeng is one of PSA’s biggest shareholders along with the French state and the Peugeot family.
Dongfeng’s stake in PSA has attracted attention because of the possibility it could interfere with U.S. regulatory approval for the deal. U.S. economic adviser Larry Kudlow said last month the Trump administration intends to review the proposed merger because of the Chinese automaker’s stake in the combined company.
Reuters and Bloomberg contributed to this report.