France to na­tion­al­ize STX ship­yard if Italy snubs deal

Kuwait Times - - BUSINESS - PARIS: Role of the state

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

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