Peugeot's CEO prepares to step aside for Dongfeng deal - sources


By Laurence Frost and Norihiko Shirouzu

PARIS/BEIJING, Nov 23 (Reuters) - PSA Peugeot Citroen is interviewing candidates to replace Chief ExecutivePhilippe Varin, after Chinese partner Dongfeng said a deeperalliance under negotiation should be accompanied by managementchange, sources with knowledge of the matter said.

Varin himself is leading the hunt for a successor who hasthe calibre and experience to head a global carmaking alliance -qualities that Dongfeng has emphasised when discussinga capital tie-up and expanded industrial cooperation, accordingto the two sources.

After speaking at an industry conference in Berlin onSaturday Varin declined to comment on a report in Le Figaro thatthe troubled carmaker may hire former Renault chief operatingofficer Carlos Tavares as his new second-in-command.

"I am sorry, I have a plane to catch," he told reporters.

Peugeot and Dongfeng are in talks to build on their existingChinese joint venture with cooperation in other markets and amulti-billion-euro share issue that would see Dongfeng and theFrench government acquire stakes in the French carmaker, sourcesfamiliar with the matter have said.

Peugeot, one of the carmakers worst-hit by Europe's six-yearmarket slump, is cutting French jobs and plant capacity as itstruggles to halt losses within two years.

Even then it will lack the financial clout and industrialscale to compete globally on its own. Varin has acknowledgedthat Peugeot will need new partners and fresh capital to supportfuture vehicle and technology investments.

Varin, 61, joined Peugeot from Anglo-Dutch steelmaker Corusin 2009 and has steered the company through the worst of theEuropean crisis. But his support for a deeper tie-up with 7percent shareholder General Motors or Dongfeng has led tobouts of tension with members of the founding Peugeot family,which would lose control of the company in the planned capitalhike.

The company is now seeking to raise as much as 4 billioneuros ($5.4 billion) in the share issue, newspaper Le Monde saidearlier this week.

Dongfeng Chairman Xu Ping sees Renault's 14-year-old alliance with Nissan as a model for thedeeper partnership under discussion with Peugeot, said a sourcefamiliar with the Chinese carmaker's thinking.

"But they wonder whether there's an executive capable ofrunning a Dongfeng-PSA alliance the way (Renault CEO) CarlosGhosn has transformed Nissan," the source said.

Tavares, 55, began his career at Renault in 1981 and movedto Nissan 23 years later as a programme director before going onto hold senior alliance roles such as chief of Nissan Americas,culminating with his stint as Ghosn's deputy at Renault.

Tavares, who could not be reached on Saturday, left Renaultabruptly in August after saying publicly he would like to leadanother carmaker. Inconclusive press reports have since linkedhim to high-level openings such as the CEO's job at luxurysports carmaker Aston Martin, succeeding Ulrich Bez.

The process of recruiting Varin's successor is "not far froma conclusion", one source close to the situation said, withoutidentifying candidates.

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