France's 'economic patriotism' is not what it seems

Fri Apr 24, 2015 3:04am EDT
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By Andrew Callus

PARIS (Reuters) - Foreigners are set to take over several French blue chip firms this year and will largely do what they want with their prizes - showing the limits of new laws passed in the name of "economic patriotism".

A decree extended state veto powers on foreign bids to more sectors deemed strategic last year and legislation taking effect this year encourages double-voting rights for the state and other long-term shareholders.

Economy Minister Emmanuel Macron spoke last month of "the determination and the ability of the state to use all weapons available to investors" to help France's industry and further the Socialist government's main goal of job creation.

But behind the talk and the defensive rules, Thomson Reuters data show the 2014 value of announced merger and acquisition deals by foreign bidders in France was about $104 billion - more than any other top 10 world economy bar the United States - albeit as a result of a couple of particularly large deals.

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Part of the 'Loi Florange', a law named after a steelworks and designed to keep industry alive and at home, gives those who have held stock for more than two years double-voting rights unless a two-thirds majority votes for one-share-one-vote.

It favors holders of large blocks of stock and investors fear it could drag on share valuations and tie management hands.

It could certainly block an all-out bidder, but the state is not always the beneficiary. Corporate raider Vincent Bollore has used the tool to tighten his grip on media group Vivendi (VIV.PA: Quote).   Continued...

French President Francois Hollande (C) looks at workers as he visits the Lebronze Alloys forges in Trie-Chateau, northern France, April 3, 2015. REUTERS/Alain Jocard