The French government nationalised the Renault car company at the of World War II and in the 1970s and 1980s the company was a typical loss-making public entity. The company did what it was told, including supplying F1 engines to Guy Ligier whether it wanted to or not. Although the then President, socialist Francois Mitterand, was opposed to privatisation, he found himself having to work with the Gaullist parties, which won majorities in the French parliament and by 1994, after a failed merger with Volvo, Mitterand agreed to reduce the government’s share in Renault to a minimum of 50.1 percent.
Two years later, with Mitterand gone and President Jacques Chirac in power, Prime Minister Alain Juppé agreed to sell another six percent so that Renault became part of the private sector, although the government still had effective control through other institutional shareholders. In 2002 a further 15 percent of the government shares were sold to Nissan to create the Renault-Nissan alliance and gradually other shares were off-loaded, leading to a final sale of 8.5 percent in 2003, which dropped the government share to 15 percent, freeing the company from any form of blocking vote.
In recent weeks, however, the socialist finance minister Emmanuel Macron, a former investment banker (eh?), began buying Renault shares in order to raise the government’s stake to nearly 20% in order to block a resolution that would stop Renault from voting through a resolution that would maintain the company’s one-share, one-vote system.
The question of voting rights has developed following the passage last year of what is called the Loi Florange which requires public companies to make an effort to find a buyer before closing any factory. The law also included a clause that investors who held shares for more than two years – and registered them – could secure double voting rights by 2016, unless there was a general meeting at which the other shareholders voted against the idea with a two-thirds majority. By buying the shares the government blocked that vote, despite opposition from the management. The government says that it will now sell the shares that it bought and return to 15 percent, but will have an estimated 28 percent of the voting rights, enough for a blocking vote.
The move was made to try to ensure that in the future Renault will not close any French factories and move production abroad. Renault’s shares dived five percent following the move as the markets worried about the reaction of Nissan and Mercedes (which also owns some Renault shares).