France expands Renault stake before law vote

 
Adam Hignett
THE FRENCH government announced yesterday its intention to expand its holding in Renault, with the aim of ensuring long-term stakeholders get double votes.

In order to have enough firepower to ensure the rules of the controversial Florange law are enforced at the car manufacturer, it plans to expand its stake by 4.7 per cent to 23 per cent.

The expansion will entail the purchase of 14m further shares at an estimated cost of between €814m (£590m) and €1.2bn. However, the government has acquired options to the protect the stock with the aim of selling down its stake shortly after the vote.

Under the law, passed last year, shareholders will automatically be granted double voting rights if they have held a stake in a French company for more than two years. The law will automatically apply the measures to long-term shareholders for all companies, unless they vote to maintain the existing structure at a general meeting (AGM). Renault had expressed its desire to retain the one share, one vote system it currently has and subsequently tabled a resolution to maintain the system at the next AGM.

The socialist government, which pushed through the law despite the objection of several investors and companies, insists it is necessary to ensure the success of “long-term capitalism”.

The French economy minister, Em­manuel Macron, is determined to force this vision upon Renault, saying: “This deal shows the state’s intention to use all the arms at the disposal of investors today to promote a progressive, long-term kind of capitalism.”

The French state bought into the ailing car firm last year for €3bn. At the time, the government bought a 14 per cent stake alongside Chinese auto firm Dongfeng and held 44m shares in the company prior to expanding its stake.

The Florange law also adds stringent sanctions on companies planning to close plants without seeking a buyer.

Shares closed up 0.95 per cent.

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