It must be a rather satisfying feeling to “cock a snook” at a former employer, says Lex in the FT. Yet few would ever have the opportunity to do this on the scale of France’s finance minister Thierry Breton – who two months after he resigned as the chief executive of France Telecom announced the sale of up to 4bn euros of the government’s stake in the telecoms group.
The problem is that the French government’s timing is not ideal: it may retain some 33% in France Telecom, giving it a blocking minority, yet it’s a bearish time to sell the stock. As it is, the incumbent operator has not performed well so far this year. Shares are being marketed at some 22.50 euro per share, says Mike Monnelly on Breakingviews.com – which may be low for the government, but is not a particularly generous offer for the buyer, considering that that’s a mere 1.7% discount to Friday’s closing price.
The block trade is also a lot for the market to “digest”, as it represents the same volume that would be traded in almost 30 days.
Moreover, the sale comes on the first trading day that the government’s lock expired – a surprise for investors, who thought the state would wait until after the outfit presents its strategy three weeks from now, which should also boost the stock’s price.
So why now? Perhaps it’s a signal from the French government to prove to the markets that the “show is still on the road”, in spite of their population opting for the ‘non’ vote during their referendum, says Lex. For Breton the news is also good: he must decide whether to privatise gas utility group GDF. This is more sensitive than the France Telecom trade – yet with the pressure now off the French coffers with France Telecom’s funds now secured, he may do this sooner rather than later.