Renault SA (RNLSY) shares surged the most in fifteen months Friday after the government of France said it had sold a 4.73% stake in the carmarker on the open market, effectively blocking a route for Renault to deepen its ties with Japanese partner Nissan Motor Co.
France's state investment unit, L'Agence des participations de l'Etat, or ADPE, said late Thursday it had sold shares to institutional investors for €1.21 billion ($1.4 billion), realizing a gain of €55 million on the disposal of 14 million shares.
Renault shares climbed 4.5% to €90.50 each by mid-day in Paris, the biggest gain since July 2016, as investors hailed the government's partial retreat, which should give Renault CEO Carlos Ghosn greater freedom to drive strategy
That hope may yet prove misguided. Despite the sale, the state remains Renault's biggest shareholder. Its remaining 15.01% stake leaves it slightly ahead of Nissan and gives it an effective veto over strategic decisions.
France bought the stake that was sold this week in April 2015, to increase its shareholding to just under 20%, days before Renault was planning to introduce new rules that would have limited its shareholders to one vote for each share they own. That would have exempted Renault from France's Florange law, which introduced double voting rights for investors who held shares for more than two years, effectively giving Nissan a stronger voice.
French President Emmanuel Macron, in his then role of finance minister, responded by increasing the state's holding, creating a rift with Renault management. The planned repeal of the double voting rights was subsequently defeated and new rules were written into Renault's governance ensuring the application of the Florange law.
"The governance agreements between the state and Renault, signed in February 2016, rest entirely in place," ADPE said in a statement announcing the sale late Thursday, November 2.
Renault has long since reconciled itself with the reality of the state directing its strategy, at least when it comes to protecting manufacturing jobs in France. "This sale evidences the support that the French State as shareholder of Renault gives to the strengthening of the (Renault/Nissan) Alliance and it occurs in a consolidated climate of trust among Renault and its main shareholder," the company said on Friday.
The manner of the share sale must, nonetheless, leave a sour taste in the mouth of Ghosn.
Renault and Nissan, which generates the majority of the alliance's profit, would benefit from closer structural ties. Yet their partnership remains in a limbo-state, blocked from progressing by the French state's dominance of Renault's share register.
A sale of the 4.73% block to Nissan would have been a simple route to strengthening the companies' cross-holding as a precursor to still closer operational cooperation. It would also have been a powerful message that Macron's election pledge to create a business friendly environment was more than just rhetoric.
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