Bouyges vs financial capitalism

The big business news story this week in France was family-owned Bouygues rejecting a bid for its telecoms business from rival Numericable-SFR, despite the juicy size of the offer. In France, the episode has been portrayed by some as a battle between a business that likes to see itself as representing all its stakeholders, against highly successful French businessman Patrick Drahi, who owns Numericalbe-SFR through his holding company Altice. Some commentators say Drahi has gained a reputation as a “deal-hungry finance whiz”, who often uses bank debt to finance his deals.

Bouygues SA CEO and chairman Martin Bouygues said after rejecting the €10 billion bid - double what was offered last year by another telecoms group - that “not everything is about the money.” Bouygues added that the deal would have had potential social costs attached to it, given the prospect of job cuts that consolidation in the sector would have probably led to. In a statement, the company said: “The Bouygues group has always strived to write an industrial story that creates value in the long term with its employees and suppliers, and in the interests of its customers.”

Of course, there were other reasons for the rejection of the deal, like the fact that the French government was strongly against it, saying that the consolidation in the sector would have potentially harmed consumer interests.

And local newspapers have pointed out that it might not have been such a good idea that Bouygues, which makes most of its revenues through construction, go against the wishes of the French government given its huge reliance on public sector contracts. Nevertheless, the family business reasons for the rejection weren’t just window dressing. Bouygues sees itself as a family business with considerable employee involvement committed to the long term.

Founded by Martin’s father Francis in 1952, Bouygues is one of France’s biggest conglomerates with revenues of €33.1 billion in 2014. The family control just over 27% of the voting rights in the business, which is also listed on the Paris stock exchange. Another 30% of the voting rights at Bouygues are owned by its 60,000 staff.

Interviewed by French business magazine Challengers about the bid, François Morin, professor emeritus at the University of Toulouse, said that Bouygues and family capitalism may have won this round against the forces of financial capitalism, but he questioned how long businesses like Bouygues will resist similar takeovers. “Ultimately, the question is how long Bouygues, a family business will be able to withstand financial capitalism,” he said.