View from City Road: A clean break at Rhone-Poulenc

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The bubbling row over the degree of control to be exercised by the French government over the merged Renault-Volvo group could scarcely have come at a worse time for the soon-to-be-privatised Rhone-Poulenc, which began its institutional roadshow in London yesterday.

The nub of the dispute over Renault is fear on the part of the Swedes that the French will be keen to see any politically awkward job losses foisted on to Volvo, the junior foreign partner.

To Swedish eyes the French government's ability to discriminate selectively against Volvo will be safeguarded following privatisation by a 'golden share' which might, for instance, be used to force Volvo to reduce its combined stake in the merged company.

At Rhone-Poulenc the break will be a good deal more comprehensive. There will be no golden share. After privatisation the state will retain only an indirect holding via the stakes held by state-owned companies, principally Credit Lyonnais's 7.4 per cent and the insurance group AGF's 7.7 per cent.

Moreover, of 18 board directors, six directly appointed by the state and six elected by employees will have to stand for re-election following the sale.

Admittedly, all is not entirely as it seems. As well as the shares held by Credit Lyonnais and AGF, another 6 per cent will be steered into the reliable hands of a stable core of shareholders. And the remaining six directors, appointed by the voting shareholders - effectively the state - will remain in office until the end of next year.

Equally, it is an accepted fact of French business life that all governments have occasional dirigiste tendencies that are hard to resist - reinforced by the close personal links between the administration and French executives.

That said, Rhone-Poulenc, only nationalised in 1982, has a long history of independent thinking on which to draw. It has also been left a free hand to run itself as it thinks fit. Indeed, it has already been through a painful restructuring, a thorough process that has left the company well placed to benefit from any revival in the globally depressed chemical industry. This point was not lost on British institutions yesterday.