French finances will take an electoral pause

It should have been what the French call a Évndennce, an obvious.Almost a year ago, Food Couche-tard, a chain of Quebec stores, offered to leave 18.000 million euros in the land of the ancestors of its founders to buy Carrefour.The cheeses promised to invest billions and not fire anyone.But Emmanuel Macron ruled out the agreement with a Jupitian hand gesture.

It is true that the Canadians were clumsy in their approach.They hired Macron Expatron, Rothschild.But the owner of Couche-tard consisted more to travel the halls of Carrefour and Monoprix than to inform the Minister of Finance, Bruno Le Maire.Surprised by the proposal, he rejected it flat on cable television.

This illustrates to what extent politics and private companies are entangled in the seventh economy of the world.And explain why Parisian finances will begin 2022 in a relatively placid way, but they will probably end the year with an explosion.Macron fights for a second term.Although it has a comfortable advantage in the poll.

This will cause bankers to lose enthusiasm for operations to elections.Not only because they fear that transactions, especially those that involve international buyers, face additional scrutiny during this politically feverish period.Also because there is a strong pro-macron faction between the executive class of CAC 40 that wants to avoid doing anything that can throw a corporate exfinancing of the Elysium.

In general, Macron has been good for business and mergers.It is true that it has hindered some great operations, such as the fusion of Renault with FCA two years ago.But the nicker of candidates for their position may not be more complacent.Éric Zemmour, an experimentist with Eurosceptic and hard -line opinions against immigration, would probably be even more hostile to companies and foreign capital than Macron's main opponent on the right, Marine Le Pen.The left is fragmented.And Valérie Pecresse, head of the Regional Government of Paris, candidate of the center -right, is not perceived as more open to the market forces that Macron.

In this context, delicate agreements will be suspended, at least until after Macron wins the elections, and perhaps for longer if his party does not get a solid position in Parliament.The greatest of them would be the long -awaited EDF restructuring, the gigantic electric in which the State has 85%.It is likely that the government acquires small floating capital and separates renewable assets from its nuclear energy business.

The purchase by foreigners in sectors considered strategic - a definition that France has expanded to include yogurt, supermarkets or cars - would remain prohibited.At the end of November, the Ministry of Finance expanded one more year the hardened restrictions on the foreign property of companies that it considers strategic.Foranian buyers should receive permission to take participations greater than 10% in health quotes, electronic communications, technology, aerospace, data centers, media and food safety.

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And the buyers of Private Equity, who are considered temporary owners, will want to avoid assets that affect national interests.That, for example, seems to exclude any imminent sale of companies such as IDEMIA, a security business acquired by Advent and BPIFRANCE to Safran in 2016.Valued at 2.700 million euros, specialized in biometric identification technology and provides government services, including border control.Putting into play such an asset would be complicated.

Similarly, privatizations, such as 51% of the Government in Aeroports de Paris, which Macron wanted to use an innovation fund, they can have to wait until the end of 2022, if not beyond.Although a referendum to block any sale of the airport operator failed to gather enough signatures in 2020, the company quotes in the middle of its maximum presemm, which makes a sale financially less attractive, and potentially easier to criticize for the opponents.

Difficult, but not impossible, to carry out in an electoral campaign would be the national mergers that raise anticompetitive issues.That said, in October Macron refused to renew the mandate of Isabelle de Silva as Chief Antimonopoly, a sign that many bankers interpreted as wanting to facilitate the creation of national and European paladins.

But the problem is that mergers usually involve employment cuts, which would give ammunition to Macron's opponents.Although it was not the main cause of the end of the conversations between Carrefour and Auchan, it did plan on them.A fusion would have given rise to a national giant with a 30%share, a reduction in competition, and less jobs.

After the elections, a union of Carrefour with Auchan-or even a retenting with Couche-Tard-may be possible.They could even be on the table more sound, such as the long studied purchase by BNP of Société Générale.Meanwhile, the repressed demand for assets abroad by French heavyweights with sanitized balances such as LVMH, L’Oréal, Keing, Sanofi, Totalenergies and Schneider Electric can be more politically acceptable.Another thing is that their shareholders can support the prices that they will have to pay abroad.

The authors are columnists of Reuters BreakingViews.Opinions are yours.The translation, by Carlos Gómez below, is a fourty responsibility