PARIS (Reuters) - The French government increased its stake in Renault (RENA.PA), boosting its influence as the carmaker’s biggest shareholder in a challenge to Chief Executive Carlos Ghosn that risks destabilizing the Renault-Nissan alliance.
France will temporarily raise its holding to 19.7 percent from 15 percent and has already amassed most of the additional shares, the finance ministry said on Wednesday.
The government said the move was designed to secure double voting rights for longer-term investors — itself included — after a vote at Renault’s April 30 shareholder meeting.
“It seems that Renault is being used as a political football,” said George Galliers, an automotive analyst with Evercore ISI. The intervention clearly “goes against the company’s wishes”, he added.
The announcement appeared to come as a surprise to both Renault and Japan’s Nissan (7201.T), its partner in a 16-year-old alliance. The companies declined to comment.
“This was completely unexpected,” a senior Renault source said. “Nissan was not given any warning.”
Legislation introduced under Socialist President Francois Hollande doubles the voting rights of longer-term shareholders in French companies, unless they opt out of the so-called Florange law by a two-thirds majority.
The Renault share purchase reflects government determination to use all available tools “to promote a progressive, long-term kind of capitalism that supports workers and helps companies grow”, Economy Minister Emmanuel Macron said.
By increasing its Renault holding, the government pledged to block the company’s “one-share, one-vote” proposal to opt out of the Florange law. The move amounts to a public put-down to CEO Ghosn, who has headed Renault and Nissan for the past decade.
Similar moves under way at EDF (EDF.PA) and GDF Suez GSZ.PA are likely to tighten France’s grip on both utilities, potentially allowing the state to reduce its holdings while maintaining their voting clout.
Renault shares were little changed after the announcement, before eventually rising 0.8 percent to 85.92 euros at 1225 GMT. Shares in Nissan, which is 43.4 percent-owned by the French carmaker, closed 1.2 percent lower in Toyko.
“It’s difficult to read the impact,” a Paris-based trader said, adding that the state intervention would “raise questions about relations between management and its main shareholder”.
It could also complicate any move to secure the future of the Renault-Nissan alliance by replacing its reciprocal shareholdings with a better defined holding structure or even a full merger, before Ghosn’s contract expires in 2018.
The French government said it would pare its Renault stake back to 15 percent after the shareholder meeting, outlining a system of put options that have been secured to guarantee a minimum price when the 14 million shares are resold.
But while Nissan is deprived of any votes on its own 15 percent stake in Renault, the voting weight of the government’s equivalent holding will surge under the new law.
“Nissan is already unhappy at not being able to exercise its votes in Renault,” the same high-ranking company official said.
“This demonstrates a very clear determination by the state to weigh on any future decisions on the future of Renault and the alliance.”
($1 = 0.9245 euros)
Additional reporting by Jean-Baptiste Vey, Michel Rose and Alexandre Boksenbaum-Granier; Editing by Lisa Shumaker and Keith Weir