The French government has decided to give up some of its control over Renault. To do this, it will sell 4.7 per cent stake that it has in the car maker. According to the state’s investment agency APE, the government sold 14 million Renault shares for US$1.4bn.
This means the government stake now stands at its historical level of 15 per cent. Renault acquired the shares offloaded as part of the transaction and plans to offer them to employees.
It may be recalled that the shares were acquired in a contentious power struggle two years ago. French President Emmanuel Macron, who spearheaded the stake purchase as economy minister in April 2015, is reversing the move, as promised.
The government had acquired the shares in a surprise move as it sought to thwart an effort by Nissan Motor to gain a say in its French partner; by securing special voting rights that give it more sway in the automotive alliance than the Japanese car maker, which generates a majority of the profit.
This news is quite positive as it will reduce tensions between the French government and Renault CEO Carlos Ghosn, who was sidelined in the stake purchase. However, the government’s remaining holding will still limit closer capital ties with Nissan. France remains Renault’s largest shareholder after the sale, narrowly ahead of its Japanese partner’s holding.
On its part Renault said the transaction is “particularly timely” as it embarks on a strategy to double electric-car offerings in the next five years and widen its presence in China to fend off expansion by Volkswagen into battery-powered vehicles.