French state opposed to Eramet CEO change -source

PARIS, March 4 (Reuters) - The French state, the second-largest shareholder in Eramet, is not in favour of a change in leadership at the metals and mining group as sought by its leading shareholder, a source familiar with the matter said.

The Duval family, which controls nearly 37% of Eramet, has written to the French state’s APE vehicle to suggest the firm replace chairwoman and CEO Christel Bories.

“The State has no intention of changing the governance of the company,” the source said regarding the Duvals’ approach to APE.

A representative of SORAME and CEIR, the entities that hold the Duval family’s shares in Eramet, declined to comment on the matter.

The Duvals and APE, which has a 25.6% stake in Eramet, are tied by a shareholder pact.

Appointed in 2017, Bories’ current mandate is set to expire at Eramet’s next annual shareholding meeting on May 28.

Eramet’s board is due to gather on March 11 to prepare for the meeting.

The Duvals’ apparent move against Bories, first reported on Wednesday by French financial daily L’Agefi, was unexpected.

“A departure of Mrs Bories at a time the group is in the middle of the execution of restructuring measures and without a justifiable rationale would be taken negatively by equity markets,” Exane BNPP analyst Sylvain Brunet said in a note.

L’Agefi said the family was unhappy with the handling of alloys maker Aubert & Duval and of New Caledonian nickel unit SLN, as well as an increase in group debt.

Eramet is in talks to sell Aubert & Duval, the historic business of the Duval family, which has been hit by a slump in aviation.

“I think the Duvals’ pride has been hurt, Aubert & Duval is their baby,” a source familiar with Eramet said.

The difficulties of Aubert & Duval contributed to a group net loss of 675 million euros ($812.97 million) for 2020.

Eramet shares rallied after the publication of its results in mid-February as investors welcomed its outlook calling for a rebound in core profits this year. ($1 = 0.8303 euros) (Reporting by Gwenaelle Barzic and Gus Trompiz Editing by Sonya Hepinstall)