Leading French carmaker PSA Peugeot Citroen is in talks with US giant and world number one General Motors on forming a "strategic partnership," French Labour Minister Xavier Bertrand said Wednesday.
The news sent Peugeot shares soaring almost 13 percent to 16.20 euros ($ 21.4) in early afternoon trade on the Paris stock exchange.
"The chairman of the group informed me last night about discussions for a strategic partnership and told me it was good news for the group", Bertrand told Europe 1 radio.
Bertrand said Peugeot chairman Philippe Varin had told him the deal would allow the French group to cut its production costs but he would not be drawn on whether the plan was for a full merger or a simple alliance.
The minister said the talks were broadly good news but that his government was seeking assurances French jobs were safe. President Nicolas Sarkozy is seeking re-election in nine weeks and Peugeot is a major French employer.
The French state helped bail-out both Peugeot Citroen and its rival Renault during the recession that followed the 2008 credit crunch but does not hold a stake in the group. It will nevertheless watch the talks closely.
"The government does not interfere in decisions taken by big private groups but obviously we're watching the situation at PSA closely because it concerns French industrial strategy and jobs," said Budget Minister Valerie Pecresse.
Peugeot confirmed overnight it was in talks with other carmakers, without identifying GM, and the business daily Les Echos said the two groups were planning to announce their alliance at the Geneva motor show next month.
"In the context of its globalisation strategy and improving its operational performance, PSA Peugeot Citroen looks at potential cooperations and alliances," the firm said in a press statement.
"Discussions are taking place and there can be no certainty at this stage that these discussions will result in any agreement," it said.
General Motors also refused to confirm the deal, saying simply: "GM regularly holds discussions with others in our sector but wishes to make no comment on this specific information."
Peugeot is France's top car manufacturer, ahead of Renault, and Europe's second, behind Volkswagen.
The Peugeot family controls 30.3 percent of the capital and 45.75 percent of voting rights in the firm which effectively took over French car manufacturer Citroen in 1976.
Last year, the firm, which employs 205,000 people worldwide, sold 3.5 million cars around the world, two-thirds of them in Europe where the market is under pressure as the economy slows sharply.
The Financial Times reported that the alliance would see Peugeot and GM's European subsidiary Opel Vauxhall jointly developing parts and engines in Europe for vehicles sold under their respective brands.
PSA revealed last month that it was open to the idea of an international alliance but rumours had earlier focused on a possible tie-up with the US and Italian group Fiat-Chrysler.
PSA's sales fell 1.5 percent last year and its net profit was cut in two, to 588 million euros ($777 million).
The group already has cooperation agreements with Germany's BMW to build petrol engines, with Italy's Fiat and Turkey's Tofas to build light trucks, and with US giant Ford for diesel engines.
It works with Japan's Mitusibishi to build SUVs and electric cars, with Toyota for small cars and with its historic French rival Renault to build motors and mechanical parts.
But the group has struggled to compete globally with industry mammoths like GM, Toyota and Volkswagen and auto alliances such as Renault-Nissan and Fiat-Chrysler.
More than half a million Apple computers have been infected with the Flashback Trojan, according to a Russian anti-virus firm.Its report claims that about 600,000
Is it possible to create true artificial intelligence and, if so, how close are we to doing so, asks mathematician Professor Marcus du Sautoy.It was
Most Watched VideosView all posts
The murder of a white supremacist leader has presented Jacob Zuma with an acute test of his bridge-building skills as he tries to stop the
Fight continues for Nigeria oil spill victims
A Nigerian man is in FBI custody in Los Angeles after flying from New York's JFK Airport to Los Angeles International Airport without a valid
Most Read NewsView all posts
Most Watched Movies
STARRING: CHINWELATU AGU, CHARLES AWURUM, CHARLES INOJIE, ENOLA BADMUS, CHIBUZOR EMELU SIMON They are jobless and clueless of applicable means of changing their
ABOVE PRINCIPALITIES They've lived for about 20 year without a child. Theyare very influential in the society. It is indeed their plight God grants
Features: Tonto Dike, Chidi Mokeme An unhappy wedding planner (Tonto Dike) had to plan a royal wedding only to find out she's a princess and stories
The story of the only wish of a dying man on his sick bed to his dear son to make him a promise to
Goldie Zenneth (Yvonne Nelson) thinks the world revolves around her. She will go at any length to get what she wants even at
A young man's quest to become the Governor of his state is done at the expense of his family's happiness. On the other hand,
Concluding part of Drop of Blood and Mothers Cult. Starring: Patience Ozokwor, Ngozi Ezeonu, Mike Ezuruonye How far will a mother go to make children happy to
This video documentary explores the subject of poverty, prostitution and human trafficking in Edo state. In uncovers some shocking revelations