The French government said Wednesday it is increasing its holding in carmaker Renault to gain a blocking minority stake and ensure provisions rewarding long-term investors come into force.
A law adopted last year to encourage long-term investors will award them with double voting rights at shareholders meetings, although shareholders can vote to opt-out of these provisions.
With some Renault shareholders looking to prevent these provisions from taking effect at the annual meeting on April 30, the finance and economy ministry said Wednesday it was buying shares to take the state’s stake to 23.2 percent, up from its previous holding of 15 percent.
Given Renault’s diverse shareholder base and generally low participation rate at shareholder meetings, a ministry source said this should give it the third of votes needed to block an effort to keep the double voting rights provisions from taking effect.
Officials said the move was in line with the French government being an activist investor and protecting the nation’s long-term interests.
“This operation demonstrates the desire and capacity of the French state to utilise all the tools at the disposal of investors to promote capitalism and progress in the long term in the interests of employees and the development of companies,” said Economy Minister Emmanuel Macron in a statement.
“This operation shows that the French state is at the same time a shrewd investor and a defender of the public interest.”
The French state has not shied away from protecting companies it views as strategic, recently seeing off attempts by Yahoo! and a Hong Kong telecoms giant to buy a stake in the video-sharing site Dailymotion.
It was also deeply involved last year in the split up of rail and energy equipment manufacturer Alstom, eventually choosing a 12.4 billion euro ($13.5 billion) offer from GE over Siemens after obtaining better terms concerning the nuclear, steam turbine, offshore wind and hydro power businesses.
The finance and economy ministry said it had already acquired 9.56 million Renault shares and would buy another 4.44 million at a cost of up to 1.2 billion euros.
The Florange law adopted last year extends the practice of rewarding investors who hold their shares for longer than two years by giving them double voting rights, a practice that the ministry said is already in effect at more than half of the companies listed on the Paris stock exchange’s blue-chip CAC 40 index.
“It is an effective way of inciting investors to hold onto their shares and thus better contribute to the development of companies by reinforcing the influence of long-term shareholders, including employee shareholders,” said the ministry.
Under the law, company shareholders will have to expressly opt out of the double-vote measures.
Renault shares rose 0.08 percent to 85.33 in morning trading while the CAC 40 was up 0.24 percent. – Agence France-Presse