The fall of the financial markets has plunged the capitalization of large companies, some of which risk financial suffocation or find themselves under the threat of external appetites.
At the top of large French companies, a feeling of “Dumbfounded” dominated. In front of the panic that gripped the financial markets, the same word is used by the communications director of a CAC 40 juggernaut, a leading business banker and an adviser to big bosses (all of whom prefer to speak anonymously). “The disproportion between the reality of the health crisis and the ensuing economic crisis is unheard of, observes the advisor. It’s like a spark. The recession will be severe. Big companies are already preparing for it. “ The business banker adds: “Nobody expected it to go that fast. The oil crisis and the decision of Trump to close the borders had a major boost. “
In recent days, the staffs of big boxes have watched, dumbfounded, the course of their actions unscrew. However, the first concern, in the very short term, was elsewhere, in the need to ensure the “continuity of exploitation”. That is to say to ensure the continuation of the activity despite the constraints which are added hour by hour: management of employees at risk (pregnant women, cases of long illnesses …) and patients, organization of telecommuting, transmission of recommendations, ban on meetings, etc. At Orange, a “crisis unit” fifteen leaders, directly linked to the executive committee, was created a fortnight ago. It meets every morning at 8 am to take stock of the situation and make decisions based on its development.
“We don’t sell peanuts”
Everywhere, human resources departments are busy anticipating possible scenarios, in particular that of general containment. A critical task is to establish the list of essential personnel and their possible alternates. Most large companies follow pre-established processes, which can be triggered at any time when this kind of crisis occurs. “We don’t sell peanuts, justifies a Veolia executive. Our job is water and waste treatment, heating. We do not have a choice. One must keep. We have to stay in touch with customers, with the population. That’s what we’re doing now. ”
Beyond organizational issues, that of the economic consequences of the stock market crash is nevertheless on everyone’s mind. What will happen in the coming days, weeks? The adviser of big bosses comes to quote one “Maoist saying” : “During a famine, the fat lose weight and the skinny die”. Implied: some companies may well end up on the ground, unless supported by the State, as has promised Emmanuel Macron Thursday evening. “I don’t believe in a systemic crisis, says a CAC 40 lobbyist. It will affect a few sectors, in travel, leisure, food, events. “
The case of Air France, a company weakened for a long time and very affected by the current stampede, comes back in all conversations. The airline had to announce a “Accommodation plan” this Friday, which foreshadows a severe savings plan. The example of Accor hotels, burdened with a large debt in view of its activity, is also cited. “Those who have a lot of debt and little cash are necessarily more worried than the others”explains the lobbyist. “Fragile businesses are in mortal risk, adds the business banker. Maybe there will be nationalizations? The Public Investment Bank will have to inject money. “ What she plans to do for small and medium-sized companies.
“For the guys who have cash, it’s time to go shopping …”
In the upper echelons of business, one wonders above all who will appear to be prey. The fall of the markets has considerably lowered the stock market value of companies. The time of great crises is also that of vultures, raiders, daring. “There are going to be takeover opportunities, takeover bids. Crises promote consolidation ”, predicts the advisor. On the phone, the capitalizations of large French companies are exchanged in amazed whispers. This Friday, Air France is worth only 2 billion; Renault, between 5 and 6 billion; Valeo, just over 3 billion … At 1.3 billion euros, the Lagardere group, whose growth is based on airport and station shops, has never seemed so tiny. We could multiply the examples. “For the guys who have cash, it’s time to go shopping … Fortunately, we have the state capital to protect us”blows an Orange executive, an often-desired target, who has gone from 40 to 25 billion euros in capitalization in a few days.
“Getting a hostile takeover bid is complicated. But taking a position is simpler “, comments the Veolia executive. Czech billionaire Daniel Kretinsky, very active in France for two years, in the media (The world, Marianne, Etc.) and distribution (Casino), took advantage of the crash to push its pawns into Germany. According to information from Handelsblatt, that the entourage of the oligarch confirmed to us, it went from 5 to 10% in the audiovisual group ProSieben Sat.1. Inexpensively: the action was sold Thursday at less than 8 euros, whereas it had returned in the fall to the company at 13 euros.
“The financiers cannot do anything, tempers the lobbyist. The market is so volatile right now that it can go down further. But when it calms down, there’s a risk of recomposing. ” The big maneuvers should wait. “At the heart of a crisis, it is not easy to move. The boards of directors are quite conservative. And then, it is not easy to mobilize funding at the moment “, notes the business banker. The big financial players are under pressure. The value of their gigantic stock market investments has fallen at the same time as the markets and their customers, suffocated by the decrease in their activity, call for “Lines of credit” to be able to meet their cash flow needs.
Is this vice situation a risk? “Banks’ balance sheets are much healthier than in 2008”, replies the lobbyist, optimistic. The business banker is much less so, who is satisfied with a wish: “I hope the financial system will hold up.” And to quell the shyness of the reaction Christine Lagarde at the head of the European Central Bank, which did not reassure Thursday on its determination to guarantee the liquidity that the banks will need. His fear, in the current context, is that a “Large investment fund” or one “Big debt fund”, unable to honor its commitments, declared bankruptcy. What create a panic effect and chain reactions. “This crisis will have repercussions that we are unable to measure at the moment T”, he concludes.