France to nationalize STX shipyard if Italy snubs deal
The French state said yesterday it would nationalize the STX France shipyard if Italy does not accept its offer to split STX’s capital equally, putting down a marker on the limits of economic liberalism under new President Emmanuel Macron. The threat raises the stakes in a standoff with Rome over the shipyard’s fate, the only one in France with facilities large enough to build aircraft carriers.
Economy Minister Bruno Le Maire said nationalization would give the state more time to find a better shareholder deal, but even if temporary, it would mark the first major state intervention in the corporate world by Macron’s government which was elected on a pro-business platform.
Rome rejected the French proposal for ownership of STX France to be split equally between Italian state-owned shipbuilder Fincantieri and Paris. Both Fincantieri Chief Executive Giuseppe Bono and Italian Industry Minister Carlo Calenda raised the prospect that Fincantieri could walk away from the deal if the French government backed away from previously agreed conditions.
“We are Europeans and on STX we cannot accept being treated worse than the Koreans,” Bono said on a conference call in reference to the shipyard’s previous majority shareholder.
Italian Economy Minister Pier Carlo Padoan later took a more conciliatory tone, saying Italy was open to changing the terms of the deal, but insisted Fincantieri must have control.
“We have offered to listen to the new government’s requirements, but there is no reason why Fincantieri should give up a majority stake and control of the French company.”
Fincantieri signed an agreement in May to acquire two-thirds of STX France’s shares for 79.5 million euros ($92.6 million) after earlier reaching an agreement with the former government of President Francois Hollande, whose term ended in May.
The company is being sold off following the collapse of South Korean parent STX, but Fincantieri’s bid has raised fears for French jobs at the Saint-Nazaire site on the Atlantic Coast, as well as for French interests. Le Maire said Fincantieri was welcome to invest in STX but on an equal footing with French partners and said that the Italians had until today to make up their minds about the offer on the table.
“If our Italian friends say ‘this deal does not work for us, we don’t agree with 50/50’, the state will exercise its pre-emption rights on STX,” Le Maire told franceinfo radio. “We will buy shares, we are majority owners and we will give ourselves time to negotiate a new shareholder pact.”
Under an existing pact, the French state has a pre-emption right to buy out shareholders that runs until the end of the month. Le Maire said the cost of buying out STX’s other shareholders was “on a scale of tens of millions of euros rather than in the billions of euros”.
Fincantieri’s shares were down 7 percent at 0.975 euros per share at 1128 GMT following the STX France news and after it published first-half earnings.
Macron was elected in May on promises to boost growth by lifting constraints on business and his government has since flagged plans to privatize non-strategic state holdings while easing labor regulations. However, it has also not hesitated to lean on carmakers Renault and PSA Peugeot Citroen, in which the state owns stakes, to help a struggling parts maker in a region where jobs are scarce.
Macron has long said that the state can have a key role in the economy and still give entrepreneurs freedom to take risks in business ventures without fear of heavy-handed government interference.
Macron decided after his election to review the terms of Fincantieri’s deal to acquire the STX France stake. “We are not happy with the deal negotiated by the previous government because it does not allow French shareholders to keep control of jobs, industrial capacities and regional development,” Le Maire said.
The French side has been concerned the Italians would shift projects from Saint-Nazaire to Italy as the shipyard’s order book for huge luxury ocean liners is currently brimming over. But the French also have a strategic interest in the shipyard for its capacity to build warships. Le Maire offered to extend naval construction cooperation as part of a 50/50 ownership deal. —Reuters