France pares Renault stake to 15% in $1.92b share sale

The assembly line of the Nissan Micra at the Renault car factory in Flins, near Paris, France. Renault acquired 1.4 million shares as part of the transaction and plans to offer them to employees, the company said yesterday.
The assembly line of the Nissan Micra at the Renault car factory in Flins, near Paris, France. Renault acquired 1.4 million shares as part of the transaction and plans to offer them to employees, the company said yesterday.PHOTO: REUTERS

PARIS • France gave up some of its control over Renault with the sale of a 4.7 per cent stake in the carmaker that was acquired in a contentious power struggle two years ago.

The government sold 14 million Renault shares for €1.21 billion (S$1.92 billion), reducing its stake back to its historical level of 15 per cent, the state's investment agency APE said.

Renault acquired 1.4 million shares as part of the transaction and plans to offer them to employees, the Boulogne-Billancourt-based company said in a statement yesterday.

French President Emmanuel Macron, who spearheaded the stake purchase as economy minister in April 2015, is reversing the move as promised.

The government had acquired the shares in a surprise move as it sought to thwart an effort by Nissan Motor to gain a say in its French partner.

France prevailed in the spat, securing special voting rights that give it more sway in the automotive alliance than the Japanese carmaker, which generates a majority of the profit.

"This news is quite positive as it will reduce tensions" between the French government and Renault's chief executive Carlos Ghosn, who was sidelined in the stake purchase, said Mr Xavier Caroen, a Paris-based analyst at Bryan, Garnier & Co.

"It will obviously not resolve governance issues" as France's remaining holding will still limit closer capital ties with Nissan, he noted.

France remains Renault's largest shareholder after the sale, narrowly ahead of its Japanese partner's holding.

Buoyed by stronger sales, Renault shares have climbed 16 per cent in the last two months.

The sale resulted in a capital gain of more than €55 million for the state, APE said in a statement on Thursday.

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A version of this article appeared in the print edition of The Straits Times on November 04, 2017, with the headline 'France pares Renault stake to 15% in $1.92b share sale'. Print Edition | Subscribe