€10B worth of participation: What could be in Play?
We don’t have a crystal ball but some facts are obvious: when Mr. MACRON was the Minister of Economy & Finance (August 2014 till August 2016), he attempted to act on companies in which the French State was a shareholder. He tried to pass a law allowing the listing of Francaise des Jeux that was rebuffed by the Ministry of Budget for tax reasons, he increased the French stake in Renault from 15% to 20% and enforced the “Florange” law which grants double voting rights on shares registered for more than 2 years.
Our view for what could happen regarding the French state stake holdings, either held directly or through the BPI / CDC, in the listed companies presented on the right is that things could happen for sure but not automatically full take over on the companies.
Remember that even if Mr. MACRON has been elected on the basis to change the French politics, as a Minister he implemented the Macron Law that was passed using the 49.3 procedure, this law has been heavily criticized by the French unions and now as the French President, he’s keen to accelerate on French working rules that would give more flexibility to the French system but with strong warnings from the unions that he should not act independently and should negotiate.
That’s why in the list of participations, we have decided to exclude the ones which seem to be too sensible: EdF (partially), Areva (just restructured), CNP (strong links with the CDC and only 1% stake seems irrelevant), Dexia, Airbus (shareholder pact with Germany & Spain), Eramet (French presence in New Caledonia), Safran & Thales ( Safran buying Zodiac at this time and we are the view that this just a 1st step to further consolidation with Thales later on).
This leave in the game:
- ADP: Partial/total sale with a long administrative process & auction
- AF-KLM: Restructuring story with the mandatory 50% European shareholder level.
- Engie: 111m Shares ABB on 5 Sept.2017 still leaves room for another placing due to double voting rights.
- Orange: 9.56% easily feasible maintaining 13.45% shareholding level with double voting rights.
- Renault: 4.73% shares acquired in 2016 has always been considered as a financial participation.
- Peugeot: Restructuring is over and would represent a huge profit without being too much socially sensible
- Francaise des Jeux (national lottery) for an IPO.
In this note, we highlight the legal framework in France regarding the way the French State have to follow regulation to sell its participations in private or listed companies with the APE & CPT being the center of the process but also other regulatory bodies that might be involved in the process.
Henri DUMENY
Senior Event Driven Analyst
Makor Securities London Ltd
7 Savile RowLondon
W1S 3PE
United Kingdom
Tel: +442072905795
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