The Strategist

France sells part of its stake in Renault

11/03/2017 - 11:37

The French government has started selling 4.73% stake in the automaker Renault, France Presse (AFP) reported referring to a statement of the state agency for managing state assets.

Lu Tianyu
Lu Tianyu
As a result of the sale, France's share in Renault will return to the level of 15.01%, at which it was two and a half years ago. Nevertheless, the government will remain the largest shareholder in the auto concern.

In April 2015, the French government acquired the same 4.73% of the shares that it is currently selling to get a blocking minority stake.

At that time, the government stated that it would use its increased influence in the company to promote measures designed to encourage long-term investors. Then, there was an offer to abolish the rule that shareholders who hold shares in the company for more than two years automatically receive doubled voting rights. The government blocked this proposal, and the rule continued to operate.

The declared goal has been achieved, the Agence des Participations de l'Etat (APE), which manages state assets on behalf of the French government, stated.

The sale of 14 million shares will bring the necessary funds to the state treasury, as the French government is experiencing difficulties in achieving the budget deficit target this year.

Based on the price of shares of Renault at the close of trading on the Paris stock exchange on November 2, the value of this stake was more than € 1.2 billion.

The sale is likely to be well received by Renault's partner in the alliance, Nissan, which frowned at the increase in the French government's share in 2015.

The company Renault itself also opposed this, as it complicated the long-standing questions about whether Renault and Nissan should change their shareholding of each other.

In accordance with the agreement concluded in 1999, Renault owns approximately 43% of Nissan, which owns about 15% of the shares of the French automaker.