France has sparked a war of words with Italy by announcing plans to nationalize temporarily its STX France shipyard in a bid to halt an Italian take over, thwarting the launch of a long awaited consolidation of Europe’s fracturing naval industry.
The temporary nationalization is intended to protect “French strategic interests in naval construction,” French Economy minister Bruno Le Maire said in Paris on Thursday.
The announcement counters plans to launch a “naval Airbus” in Europe by the CEO of Italian state controlled yard Fincantieri, which was due to take control of STX France. That nationalization plan marks the first major industrial intervention backed by President Emmanuel Macron, a former Rothschild investment banker who has called for a roll back of the state economy.
“The preemptive decision that we have just taken is a temporary decision, to give us time for better negotiations and a good agreement,” Le Maire said. “There is no intention Saint-Nazaire shipyard will remain under state ownership,” he added, referring to the location of the yard in western France.
Nevertheless, Italy’s finance and economic development ministers slammed the move on Thursday, stating “Nationalism and protectionism are not an acceptable basis for establishing relations between two great European countries.”
In April, the French government led by Macron’s predecessor, Francois Hollande, agreed to allow Italian state-controlled Fincantieri to take a 48 percent stake in the yard. The deal was done after STX’s former owner, Korea’s STX, went bankrupt and Fincantieri was named as the preferred bidder for its controlling stake. The French government intervened, handing home player DCNS 12 percent while keeping its 33.3 percent stake. To allow the Italian shareholding to rise over 50 percent, but in order to keep Fincantieri’s shareholding below 50 percent, the remaining 6.6 percent in STX France was assigned to an Italian investment body, Fondazione CR Trieste.
Then came Macron’s election, and reports that the new French administration considered Fondazione CR Trieste too close to Fincantieri. This week, France said it wanted a 50-50 shareholding split with Italy, depriving Fincantieri of its majority, a proposal immediately turned down by Rome — prompting the French to announce the nationalization plan. France has preemption rights to take over STX France as the government holds a 33.3 percent stake in the shipbuilder, based at Saint-Nazaire, western France. That plan will cost some €80 million (U.S. $93 million), which will be recovered once a deal is struck with Fincantieri, Le Maire said. The French minister is due in Rome next Tuesday for talks with his Italian counterpart Pier Carlo Padoan and Economic Development minister Carlo Calenda.
Paris’s push for 50-50 ownership reflects French concern for STX’s 7,000 dock workers if Fincantieri transfers contracts to Italy. There is also anxiety over a possible transfer of French naval technology to Fincantieri’s Chinese industrial partner.
“We consider that the French government’s decision not to honor agreements is serious and inexplicable,” Rome’s finance and economic development ministers said in their statement. An Italian industrial source said that France was ignoring the fact there was little planned overlap in activity between Fincantieri’s yards and STX. Speaking during a conference call on Wednesday, Fincantieri CEO Bono said, “The purchase of STX France could give Europe the chance to compete on the world market. The objective for us is industrial, not political.”
Referring to the previous, Korean ownership of STX, he added, “We are Italians and Europeans and cannot accept being treated worse than the Koreans. Currently we are world leaders, we have a large number of deals underway and a large backlog. I would like to underline that in recent years Fincantieri has delivered 50 cruise ships against 12 delivered from Saint-Nazaire, and in the meantime STX France has changed ownership three times.”