Emmanuel Macron chooses realism over romance

Δημοσιεύθηκε: 21 Απριλίου 2015 - 14:03

France's economy minister has admitted that the country is uncompetitive as a base for global companies and can no longer take a "romantic" approach to rebuffing foreign takeovers, following the €16bn sale of Alcatel-Lucent to Nokia.

In an indication of a new, pragmatic approach to corporate deal making, Emmanuel Macron said the state would still seek involvement in transactions on French soil, but would not bend over backwards to keep company headquarters - seeking instead to preserve highly-skilled jobs.

"In the world's fiscal competition, we're not the best positioned - that's a fact - to keep and attract headquarters and corporate functions," Mr Macron told the Financial Times. "The state has an offensive and defensive role to play as promoter of industrial policies, as regulator and as shareholder. But we cannot ignore the economic and industrial environment we operate in, with its strengths and weaknesses."

In the past month, the 37-year old minister has been actively playing all these roles. He delayed the sale of French video start-up DailyMotion to a Hong-Kong company, securing a successful last-minute bid from Vivendi; built up a stake in carmaker Renault through the use of derivatives contracts, and facilitated the acquisition of telecoms group Alcatel-Lucent by Finland's Nokia.

But while he has worked to defend jobs and keep core functions in France, Mr Macron claimed to have moved on from the political approach of his predecessor Arnaud Montebourg - the outspoken minister he replaced in August. Mr Montebourg had blocked the sale of DailyMotion to Yahoo! in 2013 and tried and failed to stop the acquisition of Alstom by General Electric.

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Mr Macron suggested that the Alcatel-Lucent case demonstrated his more "pragmatic but lucid" philosophy. "A romantic or classical view of the French approach would have been to say, it's a French company, let no one attack it, let's block any merger," he said. "But the reality is Alcatel-Lucent is not a French company; it's a global company. Its main markets are China and the US, its ownership is foreign, most of its managers aren't French."

A former investment banker at Rothschild, Mr Macron has brought a knowledge of corporate finance techniques and negotiation tactics to his ministerial role.

"I see all the major CEOs regularly," Mr Macron said. "I want to be able to have confidential discussions with all the companies that pose a strategic problem. What matters to me is to find rational solutions for those that are facing difficulties so that France preserves jobs and its ability to innovate."

In his discussions with Alcatel chief executive Michel Combes, Mr Macron said he "looked very closely at the company and its strategic options for months" before concluding that the company could not survive alone.

"The best fit was Nokia," he explained, having gone over the pros and cons of an alternative deal with Ericsson and Samsung. With Nokia, he secured a commitment to developing the French-based research and development centres, Mr Macron added.

Since Charles de Gaulle's 1960s policy of creating "national champions", France has strived to protect its largest companies from foreign assaults. A decree - issued in 2005, after an approach from PepsiCo to buy yoghurt maker Danone was rebuffed - demands that overseas investors seek the state's blessing for deals in "strategic" sectors.

But this no longer means the answer will be "no". A takeover of Lafarge, the 182-year old French cement maker, by Swiss rival Holcim has met no opposition. "Lafarge committed to keeping its R&D centre in France," Mr Macron pointed out. "I want France to become the European hub for R&D."

However, DailyMotion was different, he argued. When a sale was mooted, the French state acted to defend its interests as a shareholder in Orange, owner of DailyMotion.

"It's my role as shareholder to make sure we get the best option," he said. "I was right since Vivendi's offer ended up higher."

But when, two weeks ago, the French state temporarily increased its stake in Renault to nearly 20 per cent, it surprised the markets and the carmaker itself. As did the government's use of six-month options contracts to protect the value of its government's stake.

This sophisticated move was designed to give the state enough shares to vote down a proposal to operate a "one share one vote" system at Renault, which would overturn the government's Florange Law that grants double voting rights to shares held for more than two years.

It prompted indignation at Renault, with chief executive Carlos Ghosn and the board expressing concern about increased state meddling.

But Mr Macron was unapologetic, defending his right to use hedging techniques like any other investor.

"Some managers believe shareholders are a nuisance," he said. "The balance of power is in the market. We operate in the market, so I try to shift the balance of power."

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