(News Bulletin 247) – The Minister of the Economy made his departure from Bercy official on Thursday during a speech of thanks. For seven years, Bruno Le Maire had to intervene or carry out a number of stock market files with more or less difficulty. A look back at five of them.

After having occupied the head of the Ministry of Economy and Finance with an impressive longevity, Bruno Le Maire is taking his leave. The future ex-member of the government delivered his thanks on Thursday to Bercy, which he is preparing to leave, the new executive to be formed next week by the Prime Minister, Michel Barnier.

“I am leaving with the deep feeling that these seven years have been useful for France,” he said.

Since 2017, the minister has had to manage several hot issues involving listed companies. A look back at five of them.

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> The failure of the merger between Alstom and Siemens Mobility

The first of these projects came a few months after he took office, in September 2017. The TGV designer Alstom and the German rail signaling specialist Siemens Mobility decided to merge. The idea turned out to be simple: to create a European rail champion, capable of resisting the offensive of the Chinese behemoth CRRC, which was beginning to establish pawns in Europe.

The Franco-German partnership is proving promising, with €470 million in annual synergies promised at cruising speed. Alstom’s share price will rise by more than 6% over the two sessions following this announcement. However, some shareholder advisory firms – Phitrust and Poxinvest – will be wary of the control premium granted by the German conglomerate Siemens (which would have held more than 50% of the new entity), which they consider insufficient.

This announcement was enthusiastically welcomed by Bruno Le Maire, as well as by his German counterpart at the time, Brigitte Zypries. The Bercy tenant hailed “a historic rapprochement”. But the merger obviously did not escape the vigilance of Brussels, which opened an investigation. And at the end of 2018, the European Commissioner for Competition, Margrethe Vestager, warned against the emergence of industrial champions, without explicitly citing the two groups. In February 2019, the European Commission vetoed it due to harm to competition on high-speed trains and railway signaling.

Bruno Le Maire castigated this decision, calling it an “economic error” and a “political mistake”. Alstom, for its part, would set its sights a year later on the Canadian Bombardier Transport, a transaction that this time would obtain the approval of Brussels. But the integration of Bombardier would be painful for Alstom and its shareholders…

>The broken engagement between Renault and Fiat Chrysler

It is spring 2019 and Renault is perhaps going through the worst period in its history. The Ghosn affair had only broken a few months earlier. Jean-Dominique Senard and Thierry Bolloré had taken the reins of the company, as chairman and CEO respectively. But in this tense context, a beautiful Franco-Italian-American marriage was just around the corner. Fiat Chrysler Automobiles (FCA) and Renault announced the existence of this merger project at the end of May, with gigantic synergies (5 billion euros on an annual basis) on the horizon. The stock market was delighted and Renault shares rose 12%.

The government welcomes the project (the State owns 15% of Renault), even if Bruno Le Maire issues a certain number of conditions, such as the preservation of French industrial sites. And, above all, that this union be done within the framework of the Alliance with Nissan. Renault must thus convince its Japanese partner, who is not particularly enthusiastic.

This is where things get complicated. At a Renault board meeting to ratify the marriage project, Nissan representatives abstain. This abstention is presented as constructive by Renault, and does not constitute a sticking point, according to the manufacturer. But Bruno Le Maire wants Nissan’s explicit support and the Renault administrator representing the State requests a postponement of the decision.

Exasperated, Fiat Chrysler withdrew its merger proposal, citing “the political conditions in France” in a press release the next day. “We worked with people who always wanted more and didn’t seem reliable,” mocked a source close to the Italian-American camp. A few days later, during a tense general meeting, Jean-Dominique Senard – who was reportedly on the verge of resigning at the time – castigated the role of the State, expressing “deplorment” over his position. Bruno Le Maire, for his part, would deny having scuppered the “deal”.

The rest is history: Fiat Chrysler threw itself a few months later into the arms of the other major French manufacturer, PSA, which gave birth to Stellantis in January 2021. Renault, for its part, went from bad to worse, with the dismissal of Thierry Bolloré, a heavy profit warning and several crises (semiconductors, Covid-19, withdrawal from Russia). But its current boss, Luca de Meo, managed to turn around the company, which recently became the darling of stock market analysts.

>The heavy recapitalization of Air France-KLM

Air France-KLM has kept Bruno Le Maire very busy, while the State has been the largest shareholder in the Franco-Dutch transport group throughout his term. For example, it was necessary to find a new CEO in 2018, after the resignation of Jean-Marc Janaillac. The choice then fell on Ben Smith, a true lover of aviation, who managed to calm social relations in the company while defining a convincing strategy for the group, according to analysts. Or manage the surprise increase in the capital of the Netherlands in the company, described as “unfriendly” by Bruno Le Maire.

But the most Herculean task remains the efforts that the French State has made to save Private Air France-KLM during the pandemic. The airline group is undergoing this crisis while its financial balance sheet is already more fragile than its competitors. With planes grounded, its revenues and results are collapsing. In the second quarter of 2020, its turnover was divided by six, and the group posted a loss of 2.6 billion euros, representing more than twice its turnover.

Bruno Le Maire initially announced, in spring 2020, 4 billion euros in state-guaranteed loans and 3 billion in direct loans. The minister specified that this “historic support” does not constitute a “blank check”.

But this mountain of debt, an emergency lifeline, is obviously not sustainable for Air France-KLM. In April 2021, the State decided to transform its €3 billion loan into quasi-equity securities while participating in a capital increase of Air France-KLM of €1 billion (to the amount of just under €600 million). “This is the sign of a strong commitment by the State alongside the Air France company, alongside its employees, and to guarantee the sustainability of a strategic company for the French nation,” declared Bruno Le Maire at the time.

Air France-KLM will then carry out a second capital increase of 2.256 billion in 2022, in which the French State will participate to maintain its 28.5% stake.

Under the Bruno Le Maire “era”, the government will have fully supported the company, and Air France-KLM will manage to become a profitable company again with nearly a billion euros in profits in 2023. But the restoration of the financial balance sheet came at the cost of a significant dilution of shareholders, and the share price collapsed by 80% in five years.

>Down with Couche-Tard’s advances to Carrefour

This is perhaps the case that has sparked the most controversy. In January 2021, the Canadian group Alimentation Couche-Tard, a “convenience store” specializing in local distribution, particularly in gas stations, approached the French Carrefour, the largest private sector employer in France. Preliminary discussions were initiated on the basis of a Carrefour share price of 20 euros when the stock was around 15 euros. Moreover, Carrefour took off by 13.4% on the stock market following this announcement.

But Bruno Le Maire cuts these discussions short. The minister opposes a “courteous” but “definitive” no, invoking the “food security” of the French as a strategic issue to refuse this operation. This in a country that has many large distributors and in a calendar that challenges (the episode occurs a little more than a year before the presidential election). The regulations on the control of foreign investments provide him with the legal arsenal necessary for this veto.

Carrefour and Couche-Tard have no choice but to announce the end of their discussions with a view to a possible merger and the market is disillusioned. And Carrefour shares are currently trading at around 14 euros, far from the 20 euros envisaged.

While the State is in no way a shareholder in Carrefour, it has behaved “in recent days as the sole owner of the distributor”, L’Agefi will castigate in an editorial. “Rarely has such a denial of shareholder democracy been assumed to this extent by a power claiming to be a reformer in economic matters”, the media specialist in finance will also write.

>Referee of the Homeric duel Veolia–Suez

This may have been the most significant M&A deal in the last ten years. In August 2020, Veolia launched an attack on its competitor Suez by announcing an agreement to buy Engie’s 29.9% stake in the capital and then launch a takeover bid for its rival.

A violent standoff ensued, with Suez refusing to be bought out by its competitor. The two companies multiplied legal appeals, and Suez even used a “poison pill” to curb Veolia’s ardor. The latter had to raise its offer twice before the two parties finally agreed to a peace deal in spring 2021. This allowed Veolia to buy out most of Suez’s international subsidiaries, with the remainder and activities in France giving rise to a “new Suez”.

Bruno Le Maire will constantly call on the stakeholders in this case to find an amicable agreement that will seem unattainable for a long time. Which will lead him to denounce “the haste” of Veolia or the “intransigence” of Suez, the minister not believing in “a marriage of force”. Even if it means falling out with Engie, which will agree in October 2020 to sell its shares in Suez to Veolia, while the State, a shareholder of the energy company, had opposed it. But Bruno Le Maire will therefore end up winning his case.