As Europe’s largest chip manufacturer, the fate of ST is relevant to whether Europe has a future in microelectronics or not.
So the news that the Italian government is to sell a 13% stake in ST is important.
It’s not clear, at this stage, if the Italian government is selling its entire stake in ST – i.e. 13.8% of the company – or if it is retaining its ‘golden share’ which gives it control over the future direction of the company.
The French government is also said to hold a ‘golden share’.
Under the typically European Byzantine ownership structure of ST, 71.4% of the company is held publicly, 27.6% is held by a number of agencies controlled by the French and Italian governments with 13.8% held by each national group.
Which leaves an elusive 1% owned somewhere else.
Back in 2009, the French bought a small stake from the Italians to equalise the Franco/Italian shareholdings.
Recently the French have appeared keener to put money into ST than the Italians have. The French Euro 3.5 billion Nano2017 programme is supporting ST to the tune of Euros 1.1 billion, and the French Prime Minister went down to ST’s French site in Crolles, France, where much of the money will be spent increasing capacity to 7K wpw, to announce the project.
So France seems pretty keen on keeping ST going – and not just that – it wants ST to up its game in digital ICs to world-class competitiveness – and that doesn’t come cheap.
On top of that there’s the ECSEL component support programme worth €4.8 billion to spend between 2014 and 2020. EU and national governments will each contribute € 1.2 billion to ECSEL, with industry contributing at least half of the remaining € 2.4 billion.
With this sort of money going into the European semiconductor industry, it seems unlikely that governments will hand the company over to unfettered public ownership with no strings attached to let the management spend the money as they like.
The management of ST has not, in recent years, seemed particularly keen on upping its game in Europe to become a world-class contender in digital. Someone may have to hold ST managements’ feet to the fire.
So will France take over the Italian stake in ST, including its golden share, and take complete control of the company?
No one knows, but it’s possible.
The alternative for the Italian government is to put the shares on the public market which would mean 85.2% would be in public ownership and 13.8% would be owned by the French government with the elusive 1% still unaccounted for.
At ST’s current market cap of $7.63 billion it would cost the French around a billion dollars to buy the Italians’ share.
If it did so, would the French replace the Italian top management with French management?
Well it hasn’t got much time to do so. The employment contract of the CEO, Carlo Bozotti, expires at the next AGM – held last year in June.
If the French want not only financial control but also managerial control of ST, they better get their skates on.