Since last week the French universal bank Société Générale owns 6.91% of Valéo, the French automotive parts manufacturer. Valéo has recently been fighting off Pardus Capital Management, which wants it to change its strategy to unlock more value for shareholders. Pardus owns 15.08% of Valéo's capital. The big question now is who will Société Générale support in the next stage of the skirmish: the Valéo management team or Pardus?
UPDATE on Monday June 4 : SocGen says that this was a trading error. The bank is now back down to less than the 5% threshold of share ownership in Valéo.
In today's Le Monde (dated tomorrow) Mr. Lakshmi Mittal stated that since the "merger" with Arcelor debt has been brought down to 23-24 billion dollars at the end of the 2007 first quarter. This success has come as a result of the profits generated by the group and the synergy savings already realized, in the area of about 570 million dollars with an objective of realizing 1.8 billion dollars in synergies by 2008. The main objective is to maintain the group's financial rating.
Mr. Mittal, when asked about the possible acquisition of Vallourec, said that he did not comment on rumors. When asked if he was going to help his "friend" François Pinault who, it is rumored, is interested in the Vinci building construction group he said "How can I help him? I don't know what his projects are. We have not talked about Vinci."
Today's La Tribune financial newspaper is typical of all of today's papers inasmuch as it carries an article on the above subject. French consumer confidence has risen by 6 points since the presidential election. This is attributed to the fact that Nicolas Sarkozy's first actions in government will fulfill his promises to reinvigorate the economy through a series of tax breaks and labor market reform. He has already criticized the Finance Minister who seemed to be straying from what he had promised (for example that a certain percentage of mortgage payments would be deductible from income tax payments) and he has brought him back on track.
Many people are also expecting Sarkozy to make it easier to find a job in France. I remember last year assisting at a series of lectures in Paris given by Gary Becker, who won the Nobel Prize for Economics at the beginning of the 1990s for his work on Human Capital. The lectures were organised by the Institut Montaigne, a private French think tank sponsored by the Axa Insurance Company and the American University in Paris (which has just signed a deal to move to much bigger premises than the ones it presently occupies). Many French business people present at those lectures asked Becker how the French economy could be turned around. His very clear reply was "Labor Market Reform". It seems that that is what will now happen, but maybe not as quickly as Sarkozy would like. In the first instance he will negotiate with all the trades unions and the business representatives and it is only if he cannot get satisfaction through negotiations that he will bring the negotiations to a stop and introduce new legislation.
The upcoming elections for the French parliament are expected to give Sarkozy an overwhelming majority and thus he will have no problems in introducing new laws. However even supporters of Sarkozy's UMP political movement are worried that the majority would be too large. If the UMP deputies do not have a strong opposition to think about they will probably start fighting among themselves and, as in the previous Chirac/Villepin government, some measures favored by the executive may fail to be brought in because of internal UMP opposition.
It seems that Nicolas Sarkozy is being influenced by the thinking of Michel Camdessus, who headed up the IMF until a few years ago and is now in charge of Jacques Chirac's new foundation for sustainable development. Camdessus was asked by Chirac a couple of years ago to produce a report on what needed to be done to create more jobs. One of Camdessus's ideas was to create one single type of work contract, instead of the thirty or so contracts that exist at the moment. The direction of the "one contract" is the one that Sarkozy seems to be taking but French "particularism" will probably mean that a lot of exceptions to the suggestion of a universal contract will have to be taken into account.
The purpose of this blog is to talk about France as an economy and about French Business. My interests are very eclectic, ranging from French History through French Culture to an understanding of the French psyche.
There are other aspects of France, such as cooking and wine, which are very well treated in a range of other resources on the web and in different blogs so I will not go into them.
My everyday reading includes the newspapers Le Monde, Le Figaro, Les Echos and La Tribune. I am based in that part of Paris which is near the old Bourse and some of the most enjoyable moments of the day are when I meet up with friends who work in a large range of cultural and financial institutions in the area. In one direction, the National Library is only about 200 Yards from my office and the National Theatre (La Comédie Française) is about 500 yards away. In the other direction, and the cafés in which most of the stock market people take an early expresso begin not even 50 yards away. Many of these people strike up acquaintance in the cafés and so the debates that mingle culture and finance are far from rare.
If there are any aspects of the French Economy and Business World that you think would be interesting to a wide audience, please send me a request or a comment and I will do my best to give you a good answer.