Government pressing on
with sale of partial stake in state-owned company
The London Financial Times is reporting that the French
government, after overcoming last minute doubts, has decided to
proceed with the sale of a 35% percent stake in the state-owned
SNECMA turbine engine manufacturing company. SNECMA is the parent
company of several aircraft engine and
aviation-related manufacturers, including Turbomeca and
Microturbo, which manufacture helicopter powerplants,
and small turbines for manned and unmanned aircraft,
However, the price for that percentage of the company,
representing a privatization effort that has suffered through long
delays, was set lower than expected.
The French finance minister, Nicolas Sarkozy, announced that
shares of the company would be sold at between 15.45 and 17.20
Euros, in a bid to raise up to 1.63 billion Euros (approximately $2
billion US dollars). Previously, there had been hopes by the
ministry that the sale of the shares would have raised between 1.5
and 2 billion Euros.
Jean-Paul Bechat, SNECMA's CEO, said shares in the company would
begin trading on the Paris bourse at noon on June 18. The final
share offering price will be set and announced on June 17.
The price could turn out to be higher or lower -- that would
depend on the investor demand and confidence, in a manner similar
to that of private companies going public through IPO's. The sharp
rise in oil prices and market volatility have been cited as factors
that will affect the price on June 17.
Industry analysts believe that the sale of a minority stake in
SNECMA is a gamble on the markets, and is more a reflection on the
pressure Mr. Sarkozy is feeling from the government and the markets
than anything else. It is widely believed that the sale will help
raise funds to reduce the French public debt from 64 percent of GDP
to the EU ceiling of 60 percent.
This sale is also expected to be followed by other state
privatizations, and the sale of partial stakes in France Telecom,
Air France, Electricite de France, Gaz de France and the Paris
Airports Authority, among other possibilities.
One possible buyer for the SNECMA offering is General Electric,
which has expressed an interested in buying into the French engine
maker. However, industry sources believe that GE will not
participate in the initial sale, waiting instead to see how the
offering sells in order to better gauge the true value of the