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Renault rallies after France reduces stake
November 3, 2017 / 8:13 AM / a month ago

Renault rallies after France reduces stake

PARIS (Reuters) - Shares in Renault (RENA.PA) rose on Friday after France pared back its holding to the 15 percent level that preceded a 2015 power struggle with the carmaker’s CEO Carlos Ghosn, removing a residual irritant in their relationship.

FILE PHOTO - Visitors walk past a Renault logo on the car maker's booth during the second media day of the 86th International Motor Show in Geneva, Switzerland, March 2, 2016. REUTERS/Denis Balibouse/File Photo

Renault, which has a stake of about 40 percent in Nissan (7201.T), was up 4.2 percent at 90.18 euros in early trading after a move that some analysts said could herald further state sales.

The company was the top performer on France's benchmark CAC-40 index .FCHI and also outperformed a 0.6 percent advance on the STOXX Europe 600 Autos index .SXAP.

The French state said it had sold a 4.7 percent stake in Renault for 1.2 billion euros ($1.4 billion), implying a price of 86.60 euros per share in the disposal.

Renault is buying back 10 percent of the shares sold by the state to hand out stock awards to current and former employees.

The sale could help to ease long-standing tensions between Ghosn, who also heads alliance partner Nissan as chairman, and the government of French President Emmanuel Macron.

“We expect this will be taken positively by the market and hope it is indicative of the government’s broader intention to play a less invasive role in the company,” wrote analysts at brokerage Evercore, keeping an “outperform” rating on the stock.

The Evercore team added that the sale could be “indicative of a larger, future exit on the part of the government”.

Renault’s relations with the government -- its largest shareholder -- had deteriorated in April 2015 when Macron, then economy minister, raised the state’s holding in a shareholder vote to almost 20 percent to secure double voting rights. The move was opposed by Ghosn.

The disposal this week trim’s the government’s stake to 15.01 percent, fulfilling its 2015 promise that the state’s holding would later fall back to its historic level.

That promise and expectations of the share sale have weighed on Renault shares, which are up 6 percent this year but have underperformed a 16 percent gain for the broader European autos sector.

Reporting by Sudip Kar-Gupta; Editing by David Goodman

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