France to spend €1.23bn to raise its stake in Renault

The French state will spend as much as €1.23bn to raise its stake in Renault and maintain its influence in the carmaker.

The French treasury bought 9.6m Renault shares on the market yesterday and has given a bank a mandate to acquire 4.4m more, the industry ministry said. The move will cost between €814m and €1.23bn, and safeguard extra voting rights the government and other long-term shareholders are due to receive.

The French government wants to ensure it wins a shareholder vote on April 30 that will determine whether any investor who owns the stock for more than two years can get double voting rights. The state backs the shift, allowed in French law since 2014, which will give it and other long-term shareholders more power. France is the biggest owner of stock in Renault, followed by Japanese auto-manufacturing partner Nissan Motor Co.

“This measure is aimed at protecting the current Renault-Nissan alliance structure against shareholder activism,” said Philippe Houchois, a London-based auto analyst at UBS AG.

The state’s holding will rise to 19.7% of Renault and 23.2% of its voting rights, from 15% and 17.7% before yesterday’s purchases, ministry officials said. Because of its close ties to Renault, which is based in the Paris suburb of Boulougne-Billancourt, Nissan doesn’t exercise its voting rights, leaving the government with the main influence at the French company, they said.

A Renault spokesman declined to comment.

“This operation conforms perfectly to the new doctrine of state shareholdings, which is that of active management of the portfolio,” the industry ministry said. “Its aim is to protect the state’s weight in the governance of the company and to defend its long-term interests.”

France aims to “promote capitalism of progress, of the long term at the service of employees and the development of companies,” Industry Minister Emmanuel Macron said. “It shows the state is both an investor and a defender of the general interest.”

Bloomberg