France struggles with Fiat fallout

The state of play
At May’s Mergermarket M&A Executive Club conference in Paris, panellists praised Macron for defusing the gilets jaunes movement without abandoning his liberalising reform agenda. They were convinced that France is becoming an increasingly popular place for luring investment from overseas.

Over the past six years, the contribution of inbound M&A to France has varied wildly: a mere 35.2 percent back in 2013 and touching a low of 34.7 percent in 2018. Nonetheless, peaks of 75.2 percent and 70 percent recorded in 2014 and 2016 were trumped by the 80.7 percent seen year-to-date in 2019, according to Mergermarket data.

If investment from China comes with strings attached, any deal could be viewed as a national security risk by both the left and the right. Equally, if wanting to shield against Chinese state-backed economic power games, it would seem prudent to ensure Japan remains onside as an Asian ally. The game’s afoot to become Japan’s primary territory for European investment now that Shinzo Abe’s administration and domestic companies have lost faith in a British Government hell-bent on a hard Brexit.

In addition, French opportunities may emerge, as stock market volatility has slowed equity capital market activity. As volatility continues, France’s IPO pipeline remains narrow after various companies pulled plans to go public, which could instead turn towards sale routes that may further appeal to international buyers.

Sika AG’s €2.2bn ($2.4bn) takeover of chemicals company Parex Group in January, and BlackRock’s €1.3bn ($1.5bn) buyout of investment software provider eFront two months later, collectively garnered fewer headlines, and less numerous clichéd column inches, than Fiat/Renault. However, they do highlight France as a place in which to do deals.