China's Dongfeng Motor Group Co Ltd <0489.HK> and PSA Peugeot Citroen will sign a memorandum of understanding on a capital tie-up between the two carmakers later on Tuesday, a Dongfeng source told Reuters.
The source said the non-binding agreement would involve Dongfeng and the French government each injecting 800 million euros ($1.10 billion) for 14 percent stakes in the French carmaker.
The fundraising by PSA would total 3 billion euros after selling new shares to existing shareholders, said the source, who declined to be identified because the information is not yet public.
($1 = 0.7298 euros)
(Reporting by Samuel Shen and Kazunori Takada; Editing by Paul Tait)