France: Toward Corporate Glory

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Contemplating the glory that is—or should be—France, Charles de Gaulle is sensitive about the fact that his country's businesses, though wealthy enough, are not very large when measured on an international scale. His government has consistently urged French firms to merge and thus come closer in size to the foreign (meaning U.S.) corporate colossi that De Gaulle fears could eventually make France an economic colony.

Last week two big French organizations took just the sort of merger step that De Gaulle has been advocating. Pont-à-Mousson, France's second biggest private industrial company, with estimated 1965 sales of $1 billion, and the Compagnie Financière de Suez, one of the Continent's fastest growing investment trusts, with assets of some $200 million, decided to get together. Under a provisional agreement, Suez will assume a 20% stake in Pont-à-Mousson; in exchange, Pont-à-Mousson will get between 10% and 15% of Suez, the exact share yet to be negotiated.

Steelmaking Pont-à-Mousson has 75 factories and mines in France and 13 other countries, stands to benefit from the financial savvy and worldwide banking contacts of its new corporate relative. Suez, which operated the canal until Nasser seized it in 1956, has since become a broadly diversified investment company. Its widely invested capital (banks, insurance, industry) include the more than $80 million in indemnities paid by the Egyptians for the canal. Recently, Suez has gone in for more direct participation in manufacturing, and the tie-up with Pont-à-Mousson is the latest result. Should the two companies go on to a full merger, they are likely to replace Rhône-Poulenc, the textile and chemical giant, as France's biggest financial-industrial combine.