French auto maker PSA Peugeot-Citroen is selling a 75 percent stake in its Gefco logistics unit to Russian Railways for 800 million euros [$1.05 billion] in the latest deal aimed at cutting its debt.
Europe’s second largest automobile maker will also receive a $130 million dividend from Gefco, its most profitable division, as part of the agreement with the state-owned railway company.
The two companies hope to close on the deal, which requires regulatory approvals, by the end of the year.
Russian Railways has said the Gefco acquisition will help it to emulate rival rail companies like Germany’s Deutsche Bahn in establishing a global logistics business.
The transaction will help Gefco to expand its coverage in Latin America, China and India and boosted growth in Eastern and Central Europe and particularly in Russia, Peugeot said in a statement today.
Gefco will remain headquartered in France and retain its current management, headed by CEO Luc Nadal.
Earlier in the year, Peugeot reached an agreement with GM under which the U.S. car maker will transfer the majority of its European logistics operations to Gefco in 2013.
Gefco, which employs 10,300 people in 32 countries, also handles logistics for rival auto companies including BMW of Germany, Ford Motor Co, and France’s Renault. Automotive logistics generates around 60 percent of total revenues with the remainder accounted for by leading multinationals.
Gefco’s revenues declined 6.7 percent in the first half from a year ago to $2.46 billion and operating profit shrank over 55 percent to $82.5 million amid a slump in European car sales.
Peugeot-Citroen, by contrast, crashed to a first half net loss of $1.07 billion from a year earlier profit of $1.05 billion.
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