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PARIS (Reuters) - PSA Peugeot Citroen's (>> PEUGEOT) board confirmed the appointment of French civil servant Louis Gallois as its next chairman on Wednesday as the carmaker prepares for a 3 billion euro ($4.2 billion) tie-up with China's Dongfeng Motor Group (>> Dongfeng Motor Group Co. Ltd).
Gallois won the board's endorsement to replace Chairman Thierry Peugeot after the founding Peugeot family agreed to support the French government's choice of candidate.
The French government had already flagged the move late on Tuesday. Prime Minister Jean-Marc Ayrault's office said in a statement Gallois' experience and talent would be "an asset for PSA, which will need exemplary governance over the next few years".
Paris-based Peugeot last month announced a rescue deal in which it will sell shares to Dongfeng and the French government, reducing the family's stake to match their equal holdings of about 14 percent.
The family will see its board presence halved to two full members, outgoing chairman Thierry and cousin Robert Peugeot. Thierry's sister Marie-Helene will leave the board, while another Peugeot cousin, Jean-Philippe, remains as a non-voting member.
Dongfeng's board members will be Xu Ping et Liu Weidong, respectively the Chinese group's chairman and deputy general manager, Peugeot said.
Former Renault (>> RENAULT) executive Carlos Tavares is taking over as chief executive from Philippe Varin later this month. The change of chairman is also part of the deal's terms.
"We've long been critical of the family's involvement in the business," London-based ISI Group analyst Erich Hauser said after the Peugeot announcement. "As such seeing the family lose influence over the board as a step in the right direction."
From here on, Hauser added, "the big question is whether three equally large shareholders will find it easier to control Peugeot than one family did."
Gallois, France's investment commissioner who previously headed the SNCF state railway and defence group EADS
As Le Figaro first reported last week, however, the family agreed to back Gallois over Hauser, a former board member at Peugeot-controlled Faurecia (>> FAURECIA), after meetings with government officials.
Gallois has served on the Peugeot board since late 2012, when his appointment as a nominal independent was imposed on the company by President Francois Hollande's Socialist government in return for 7 billion euros in state loan guarantees.
His nomination will be submitted for formal approval by the new board, and by the Peugeot shareholder meeting, which is being brought forward to April 25 from April 30.
The agreement underpinning Peugeot's capital increase and tie-up with Dongfeng is due to be finalised on April 26, during a visit to Paris by Chinese President Xi Jinping next week.
(Additional reporting by Julien Ponthus and Dominique Vidalon; Editing by Andrew Callus and Louise Heavens)
By Laurence Frost and Gilles Guillaume
