Working Papers

R & D

PREVALENCE OF PATRIMONIAL FIRMS ON PARIS STOCK EXCHANGE: ANALYSIS OF THE TOP 250 COMPANIES IN 1993 AND 1998

by

C. BLONDEL* N. ROWELL** and L. VAN DER HEYDEN†

2002/83/TM

* Senior Research Programme Manager, INSEAD, Boulevard de Constance, 77305 Fontainebleau Cedex, .

** Research Associate, INSEAD, Boulevard de Constance, 77305 Fontainebleau Cedex, France.

† The /CGIP Chaired Professor for the Large Family Firm, and The Solvay Chaired Professor of Technological Innovation, INSEAD, Boulevard de Constance, 77305 Fontainebleau Cedex, France.

A working paper in the INSEAD Working Paper Series is intended as a means whereby a faculty researcher's thoughts and findings may be communicated to interested readers. The paper should be considered preliminary in nature and may require revision.

Printed at INSEAD, Fontainebleau, France. Kindly do not reproduce or circulate without permission.

Prevalence of Patrimonial firms on Paris Stock Exchange: Analysis of the top 250 companies in 1993 and 1998

Christine Blondel Senior Research Programme Manager, Family Firms [email protected]

Nicholas Rowell Research Associate [email protected]

Ludo Van der Heyden Wendel/CGIP Professor for the Large Family Firm & Solvay Professor of Technological Innovation [email protected]

INSEAD Boulevard de Constance F – 77305 Fontainebleau Cedex France Tel: +33 (0)1 60 72 40 00 Fax:+33 (0)1 60 74 55 00

ABSTRACT This report analyses the 250 largest publicly traded companies in France, the so-called SBF 250, with a focus on the prevalence, evolution, and degree of control of patrimonial firms in this sample of firms. Patrimonial firms are here defined as companies where individuals or families are identified as major ultimate shareholders with at least 10% of equity at each level of the ownership chain. The study establishes that, even in this group of quoted companies, where spread ownership would be expected to be the norm, patrimonial firms are the majority. They are present in most sectors of the economy, and their presence increased from 1993 to 1998. Their share of capitalisation is lower than their importance in number, reflecting their concentration within the “smaller range”. Stakes owned by families and individuals are quite high, the use of holdings and voting rights further increase control.

© INSEAD, July 2002. Earlier versions of this report were presented at GEEF conference (June 2000) and FBN conference (October 2001). This study benefited from the financial support of BNP Paribas Banque Privée, which is hereby gratefully acknowledged.

1 INTRODUCTION This report analyses the 250 largest publicly traded companies in France, the so-called SBF 250, with a focus on the prevalence, evolution, and degree of control of patrimonial firms in this sample of firms. Patrimonial firms are here defined as companies where individuals or families are identified as major ultimate shareholders. Ultimate ownership was looked for, i.e. when the first shareholder was a company, this company’s ownership was determined, etc… A major ultimate shareholder was considered when this shareholder had the largest stake and at least 10% of equity at each level of the ownership chain. The aim of our study is to document the prevalence of patrimonial firms in France amongst the publicly traded firms. In this first study, we remain intently factual and descriptive, and will not attempt explanations or formulate hypotheses to help us understand our findings. This will be left to further papers, as we believed there was merit in publishing a purely factual paper, devoid of argumentation or debatable explanation. The SBF250 seems to us an interesting one for the study of French patrimonial firms. First, this sample is well documented (in contrast to private firms) so that data on ownership can indeed be obtained. The study thereby also provides a “lower bound” on patrimonial firm prevalence, since the terrain of large publicly traded companies does, a priori at least, represent the privileged domain for public firms with diffused ownership. The major point made by our study is to document precisely how false this common assumption is. Large public firms with diffused ownership do indeed form an exception in the ecology of French firms, as even in their most favourable environment, they represent a minority (according to our definition). The second contribution of our study is to document the evolution of the prevalence of patrimonial firms over time. Most studies on family firm prevalence represent an observation of the population of firms at a given point in time. In this study, we apply the same definition over two distinct time instants: 1993 and 1998 (end December). This period is generally accepted to be a turbulent period in the French economy, coinciding with turbulence and growing “liberalisation” in the world’s economy. Many observers have frequently commented that the “victory of capitalism” also sounded the end of family and individual firms. We show, that at least in France and over this period, the opposite is in fact true.

EXISTING STUDIES ON OWNERSHIP AND FAMILY BUSINESS Literature on Ownership and Governance Berle and Means’ model of widely dispersed corporate ownership (1932) has inspired management literature for several decades. About 25 years ago, this model started to be questioned (Einsenberg, 1976). Studies on corporate ownership started to be conducted in several countries, mostly during the last decade. These studies established that even amongst large publicly traded corporations a significant proportion had concentrated ownership. La Porta and al. (1999) looked at the 20 largest publicly traded firms in 27 countries. These authors found that families were the main shareholders ranged from 5% (for the UK) to 70% (for Hong Kong). The percentages for other countries fell between these numbers:

2 20% in the US, 30% in , 10% in , 20% in , 55% in Sweden, and 20% in France (data referring to the end of 1995).1 The same study also analysed, for each of the 27 countries, the ownership of 10 medium-sized listed companies (10 smaller companies with capitalisation of at least $500 million, in order to have comparable sizes). Families were present in 10% () to 100% () of the cases. In the UK 60% of those companies had family owners, 30% in the US, 40% in Germany, 80% in Italy, 60% in Sweden and 50% in France.2 Faccio and Lang (2000) conducted a comprehensive study of ultimate ownership and control in 5 Western European countries. They established that families were the most pronounced type of controlling shareholders in Western Europe. End 1996, in their sample of 3,740 publicly traded corporations, families were the main shareholders in 70% of the companies in France, 72% in Germany, 65% in Italy, 67% in and 34% in the UK. Widely held corporations only represented between 4 and 11% of companies in France, Germany, Italy and Spain, 26% in the UK.3 Focusing their research on France, Bloch and Kremp (1999) studied the concentration of ownership in both listed and non-listed companies. They established that ownership was quite concentrated in France, with identified owners having large stakes of the companies in question. They found that individuals were first owners for 12% of the 680 listed firms studied. However, they only considered direct ownership, thus holdings were found to be the first category of owners. They found that the first owner was individual/family for 56% of the 282,000 non-listed firms studied (end 1995).

Family Business Literature Family business researchers, eager to establish the importance of family businesses in various countries, also contributed to such studies. Most of these studies were conducted by taking samples of companies, with the objective to extrapolate the findings to the level of a country. A serious shortcoming of this work is that there is no consensus amongst researchers on the definition of a family business. Shanker and Astrachan (1996) offered three distinct definitions for family firms, corresponding to three degrees of family involvement. Their broadest definition identified companies where a family has effective control of strategic direction. Their middle definition narrowed the sample to companies where the founder or descendant of the founder runs the company and the family has legal control of voting stock. Their narrow definition requires multiple generations, a direct involvement of the family in owning and running the company, and more than one family member in significant management responsibility. Depending on the definition used, the percentage of family businesses in the U.S. varied from 19% to 92%. Separately, a study conducted by ASMEP and JPA Associates (2000) established that 22 of the largest 100 European companies were “OFBs”, i.e. Owner-Managed and Family Businesses. These 22 companies were found mostly in Germany (9 companies) and France (10), 12 companies being in retail, and 7 in industry, of which 4 in automobile. These

1 2 ownership cut-offs are used to determine if a firm has an identified owner, 20% and 10%. Results quoted here correspond to the 10% cut-off – in line with our study. 2 Using the 10% ownership cut-off. 3 Idem. 3 authors also established that 190 OFBs could be found amongst the 967 largest European companies (turnover in excess of one billion ). The study did not specify which definition was used and whether non-national families were taken into account in OFB ownership.

OUR STUDY A desire to provide factual answers to two simple questions provided the essence of the motivation for our research. We felt we should indeed have clear answers to two basic questions concerning the prevalence of patrimonial firms in France. These questions are the following: - What is the importance of patrimonial businesses in the French economy? - How did these businesses evolve over time? In answering these questions, we largely followed the approach of La Porta & al. and Faccio & Lang. Importantly, we tracked the ultimate ownership for each of the 250 companies in both 1993 and 1998, which meant finding the owners and their ownership stake, but also the owners’ owners, etc… We also tracked the associated voting rights, an information which is not systematically published. To be precise, we now summarize the key features of our study. 1. Definition: We define a patrimonial business as a business where one or several individuals or families are identified as the major ultimate owner or owners. The family does not need to be descendants of the firm’s founder(s). Our aim is to understand the role that individuals or families play in the economy, including those individuals or families that purchase businesses. We did not narrow the definition by looking at the role of family members in the business, even though we should point out that it often is a corollary of patrimonial ownership. 2. Population: We studied the 250 largest French companies and not a sample representing a broader range of companies. By studying a precise list of companies (SBF 250, an official list of the 250 largest publicly-traded companies on Paris stock exchange), we can track it at regular times. Studying publicly traded companies also allows access to comparable data. 3. Scope: We looked at the relative importance of different types of ownership and at their distribution across economic sectors. We also studied the size of ownership stakes and of voting rights. 4. Time: We studied the SBF 250 at two points in time, end 1993 and end 1998, with the aim to understand the evolution of the role(s) played by individuals and families in French business.

METHODOLOGY: definition of ownership types We searched our databases to identify the ultimate ownership of the companies listed in the SBF250. When the main owner of company A was another company, say B, we continued to search for the ownership of company B, etc…

4 We considered that this search produced identifiable ownership when the stake of the owner(s) in each step of the ownership chain was at least 10% of equity. It should immediately be pointed out – as we will do later - that most of the firms in the SBF250 had rather concentrated ownership, including absolute majority (above 2/3 of the shares) and simple majority (between 1/2 and 2/3 of the shares). At the end of the chain, several cases can occur: - An owner is identified, and it is: . A family, or a group of families, an individual or a group of individuals: company A is then called a patrimonial firm; . A corporation with no further identifiable owner: we then call company A a single corporate-owned firm; . The state: we then call company A state-owned; . A mutual fund, non-profit organization or an employee representative body: we then call company A mutual-owned. - When no identifiable owner can be determined, we say that company A has spread ownership. It should be noted that our definition of spread ownership includes joint control situations involving two or more legally distinct companies with equal stakes. We looked at control both in terms of ownership and voting rights. We examined the degree of control of ultimate owners, taking as degree of control the weakest degree of control in the chain, when ownership was indirect.

RESULTS Prevalence of patrimonial firms Patrimonial firms were found in 1998 to represent 57% of all companies in the SBF 250. Five of the 20 largest capitalisations were patrimonial (L’Oreal, Carrefour, Pinault- Printemps-Redoute, LVMH and Promodès). So were 45% amongst the firms representing the SBF 120, so that as much as 68% of the next 129 companies4 were patrimonial.

Patrimonial firms (1998) Number % Top 20 5 25 In SBF 120 54 45 In SBF 2505 141 57

4 249 companies were referenced as part of SBF250 end December 1998 5 Idem 5

Patrimonial firms represented 35% of the capitalisation of the SBF 250 at end December 1998. Hence, patrimonial firms are more prevalent in the “smaller capitalisation” range. It should be noted that France Telecom (“state-owned”) by itself represented 9% of SBF 250 capitalisation.

Capitalisation (bn FF) Total Patrimonial firms % Top 20 3 076 737 24 SBF 120 4 717 1 500 32 SBF 250 5 130 1 781 35

Evolution from 1993 to 1998 The number of patrimonial firms in the SBF 250 increased between 1993 and 1998. In the top 20, the number of patrimonial firms went from 4 to 5 over this period. As we will see when we examine the evolution of the industrial sectors, this change can be explained by the increase in the number of companies in high growth sectors like technology and pharmaceuticals, increase to which patrimonial firms made substantial contributions. However, capitalisation did not progress in proportion, because most of the new companies were in the smaller capitalisation range.

Patrimonial firms (%) In top 20 In SBF 120 In SBF 250 Number (%) In 1993 20 44 48 In 1998 25 45 57 Capitalisation (%) In 1993 19 29 32 In 1998 24 32 35

Illustrating the dynamism existing among patrimonial firms, we can mention the entry in the SBF 250 between 1993 and 1998 of centenary and even multi-centenary firms like Beneteau (founded in 1884), Christian Dalloz (1870), De Dietrich (1684), (1850) and Taittinger (1734).

Details on the presence of different ownership types in 1998 and 1993, both in the SBF250 and the SBF120 can be found in tables 1 to 4 in exhibit.

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Presence by sector Patrimonial firms were particularly present in Luxury, Retail, Holdings and Services, but also in Automobile, Consumer Goods, Technology, Media and Pharmacy. They were almost non-existent in Energy/Utilities and Finance/Insurance.

Number of companies Total sector Patrimonial % number % cap. Luxury 7 7 100 100 Holding 17 15 88 98 Retail 22 18 82 94 Automobile 5 4 80 66 Media 15 12 80 39 Services – General 9 7 78 95 F.M. Consumer Goods 15 11 73 26 Hi Technology 22 16 73 22 Pharmacy 10 7 70 22 Agro alimentary 9 6 67 43 Services –Leisure & Tourism 8 4 50 47 Transport 4 2 50 39 Gen Industry 48 22 46 17 Construction 5 2 40 61 Property 18 4 22 17 Energy/Utilities 10 2 20 3 Finance/Insurance 25 2 8 0 TOTAL 249 141 57 35

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The evolution between 1993 and 1998 shows that the number of companies in the Technology, Pharmacy, Media and Services sectors grew thanks to a substantial contribution from patrimonial firms.

Difference 1998 vs. 1993 Total sector Patrimonial (number of companies) Luxury +2 +2 Holding -21 -14 Retail -1 -2 Automobile 0 0 Media +3 +6 Services – General +5 +5 F.M. Consumer Goods +4 +3 Hi Technology +13 +12 Pharmacy +6 +6 Agro alimentary +5 +4 Services –Leisure & Tourism 0 0 Transport 0 0 General Industry +11 +3 Construction -1 0 Property -14 -3 Energy/Utilities -5 -1 Finance/Insurance -6 0 TOTAL +16 +21

6 Because of suspension of company listings prior to fusion or de-listing, the total number of companies at 31.12.1993 was 248, and at 31.12.1998 was 249, explaining the difference of +1. 8 Levels of control The ownership stakes held by owners of patrimonial firms were considerable. 57% of patrimonial firms were controlled through ownership stakes exceeding 50%. In other words, 32% of all companies of the SBF 250, were majority-controlled by individuals or families. These 80 companies represented 15% of the SBF 250 capitalisation. As suggested by the above numbers, the smaller the company valuations, the higher the ownership stakes: in the SBF 120, the percentage of patrimonial companies controlled via a majority stake was 35%.

Patrimonial firms’ control Number of companies % of total patrimonial Absolute (above 2/3 of shares) 28 20 Majority (1/2 to 2/3) 52 37 Minority (1/3 to ½) 37 26 Relative (from 1/10 to 1/3 and more 13 9 than 2 x next owner) Marginal (from 1/10 to 1/3 and less 11 8 than 2 x next owner) TOTAL PATRIMONIAL 141 100

The level of control did not appear to decrease during the period. In 1993, 51% of the patrimonial companies in the SBF 250 were controlled via majority stakes, but a larger number were controlled through minority stakes.

Patrimonial firms’ control % of total in 1998 % of total in 1993 Absolute (above 2/3 of shares) 20 24 Majority (1/2 to 2/3) 37 27 Minority (1/3 to ½) 26 34 Relative (from 1/10 to 1/3 but more 9 9 than 2 x next owner) Marginal (from 1/10 to 1/3 and less 8 6 than 2 x next owner) TOTAL 100 100

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Indeed, new entrants had high levels of control (64% of 66 new patrimonial companies in the SBF250 were majority-controlled), but also most of the 747 patrimonial firms remaining in the SBF250, stayed at the same level of control.

Control level within patrimonial firms Number of Present in SBF 250 in 1993 and 1998 companies Decreased 15 Stable 45 Increased 14 TOTAL 74

In the SBF 120, though, while 6 patrimonial companies had increased levels of control by main shareholder, 12 had decreased levels of control. The analysis of voting rights confirmed that these were used to increase the level of control. In 1998, the main shareholders had the majority of voting rights in 74% of the 133 patrimonial companies for which we found the information (i.e. majority of voting rights in at least 70% of all 141 patrimonial companies).

Patrimonial firms’ control through voting Number Rights in 1998 % of total Absolute (above 2/3) 47 35 Majority (from ½ to 2/3) 52 39 Minority (from 1/3 to ½) 21 16 Relative (from 1/10 to 1/3, and twice the next 8 10 owner) Marginal 3 2 TOTAL 133 100

CONCLUSION This report analysed the 250 largest publicly traded companies in France, with a focus on the prevalence, evolution, and degree of control of patrimonial firms in this sample of firms. The study tried to go beyond primary ownership, and aimed at identifying ultimate owners along ownership chains. The first surprise of our study is that a majority of the firms (57% in 1998) on the SBF250 are patrimonial firms, following our definition (i.e. individuals or families being the major shareholders with a stake exceeding 10%).

7 66+74=140; figures do not include Moulinex, which came in patrimonial ownership of Torelli family during the period. 10 The second contribution of our study is to document the evolution of the prevalence of patrimonial firms over time. The number of patrimonial firms in the SBF250 has actually increased over the 5-year horizon 1993-98, indicating a remarkable growth and vitality of these firms. Over this period the percentage of patrimonial firms grew from 48% to 57%. Our third result is that patrimonial companies are present in most sectors of French economic activity. They have a particularly strong presence in luxury, retail, services and holdings, but also in automobile, consumer goods, technology, media and pharmacy, in which they thus play a major industry role. Patrimonial firms are, on the other hand, rather absent in some sectors, like among the French energy/utilities, finance/insurance and property sectors. The increase in family firm prevalence from 1993 to 98, for example, was mostly linked to the development of the technology and pharmacy sectors. Our fourth result confirm that patrimonial firms’ share of capitalisation amongst the SBF250 is lower than their importance in number (57% of firms are patrimonial firms and represent 35% of the capitalisation of the SB250 in 1998). This reflects their higher concentration in the smaller capitalisation range. Also, the very large companies in the French energy/utilities and finance/insurance sectors have spread or “state” ownership. Stakes owned by families and individuals in patrimonial firms were found to be quite high: end 1998, individuals/families had the majority of the capital in 57% of the patrimonial firms. In other words, 32% of all companies on the SBF250 were majority-owned by individuals or families. The overall control level actually increased from 1993 to 1998 (51% of patrimonial companies were majority-owned in 1993). Voting rights were used to further increase the control over these companies by families: while 80 patrimonial companies were controlled by virtue of majority ownership stakes, at least 99 were controlled through majority voting rights. Finally, it is interesting to note that the average age of patrimonial firms joining respectively the SBF120 and SBF250 over this 5-year period is considerably higher than that of the non-patrimonial firms joining the respective indices. This attests to the longevity of patrimonial firms as compared with the non-patrimonial firms in this sample. Our results comfort us with the interest of such approach and open areas for further research. A first direction is to replicate the study in other countries, using the same definitions and framework. Beyond the interest of having such data in each country, comparability should also provide new insights. Another direction would be to extend the study to include large unlisted companies. All these studies should contribute to increase the level of reliable and comparable data on family firms.

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REFERENCES Berle, Adolf, and Gardiner Means, 1932, The Modern Corporation and Private Property (MacMillan, New York, NY) Bloch, Laurence, and Elizabeth Kremp, 1999, Ownership and Voting Power in France (INSEE, Banque de France, Paris) Eisenberg, Melvin, 1976, The structure of the Corporation: A Legal Analysis (Little, Brown and Co., Boston, Mass.) Faccio, Mara and Larry H.P. Lang, 2000, The Separation of Ownership and Control: An Analysis of Ultimate Ownership in Western European Corporations, Working Paper Flören, Roberto, 1998, The Significance of Family Business in the , Family Business Review, 11 (2) Gallo, Miguel Angel, and Garcia Pont, 1988, La Empresa Familiar en la Economia Espanola, research paper 143, IESE JPA Associates/ASMEP survey, 2000, OFBs (Owner-Managed and Family Businesses) in Europe, presented at GEEF conference, Paris. Klein, Sabine, 2000, Family Businesses in Germany: Significance and Structure, Family Business Review, 13 (3) La Porta, Rafael, Florencio Lopez-de-Silanes, and Andrei Shleifer, 1999, Corporate Ownership around the World, The Journal of Finance, Vol.LIV, N°2. Leach, Peter, W. Kenway-Smith, A. Hart, T. Morris, J. Ainsworth, E. Beterlsen, S. Iraqi, V. Pasari, 1990, Managing the Family Business in the UK: A Stoy Hayward Survey in Conjunction with the London Business School, London, Stoy Hayward. Shanker, Melissa and Joseph Astrachan; 1996, Myths and Realities: Family Businesses’ Contribution to the U.S. Economy – A Framework for Assessing Family Business Statistics. Family Business Review, 9 (2).

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APPENDICES

Distribution of patrimonial and non-patrimonial firms (tables 1 to 4)...... 14

Firms entering the SBF 250 between 1993 and 1998 (table 5) ...... 16

Analysis of patrimonial prevalence by sector (tables 6 to 12) ...... 18

Analysis of ownership levels (tables 13 to 19)...... 25

Types of control and examples...... 31

Sources ...... 37

13

SBF 250 1998: distribution of patrimonial and non-patrimonial firms Table 1

Capitalisation TYPOLOGY Number % % (billions ff)

Patrimonial firms 141 57 1 781 35

Single corporate 53 21 918 18 Spread 33 13 1 771 34 State owned 13 5 563 11 Mutual/cooperative 9 4 97 2 Total non-patrimonial 108 43 3 349 65

TOTAL 249 100 5 130 100

SBF 250 1993: distribution of patrimonial and non-patrimonial firms Table 2

Capitalisation TYPOLOGY Number % % (billion ff)

Patrimonial firms 120 48 794 32

Single corporate 71 29 559 22 Spread 23 9 755 30 State 28 11 368 15 Mutual/cooperative 6 2 17 1 Total non-patrimonial 128 52 1 699 68

TOTAL 248 100 2 493 100

14

SBF 120 1998: distribution of patrimonial and non-patrimonial firms Table 3

Capitalisation TYPOLOGY Number % % (billions ff)

Patrimonial firms 54 45 1 500 32

Single corporate 27 22.5 818 17 Spread 27 22.5 1 766 37 State cooperative 10 8 559 12 Mutual 2 2 74 2 Total non-patrimonial 66 55 3 217 68

TOTAL 120 100 4 717 100

SBF 120 1993: distribution of patrimonial and non-patrimonial firms Table 4

Capitalisation TYPOLOGY Number % % (billion ff)

Patrimonial firms 53 44 630 29

Single corporate 31 26 600 28 Spread 17 14 579 27 State cooperative 15 13 340 16 Mutual 4 3 13 1 Total non-patrimonial 67 56 1 532 71

TOTAL 120 100 2 162 100

15 Firms entering the SBF 250 between 1993 & 1998 Table 5

Non-Patrimonial Patrimonial Firms firms Creation Company Creation Company Type 1684 DE DIETRICH 1919 GRANDE PAROISSE Single corporate 1734 TAITTINGER 1919 NATEXIS Single corporate 1850 ROBERTET 1922 PECHINEY Spread corporate 1870 CHRISTIAN DALLOZ 1924 MONTUPET SA Single corporate 1884 BENETEAU 1925 GASCOGNE Spread corporate 1914 CEGEDIM 1926 GEODIS State ETAM 1916 DEVELOPPEMENT 1932 COMPAGNIE ALPES State 1917 LATECOERE 1932 FRANCE TELECOM State 1925 RALLYE 1932 SELECTIBANQUE Single corporate 1929 ECIA 1937 CARBONE LORRAINE Single corporate 1932 BOIRON 1942 USINOR Spread corporate 1932 LOUIS DREYFUS CIT. 1945 RENAULT State

1938 GAUMONT 1947 SFIM Mutual/cooperative 1939 SMOBY 1951 .EXTINCTEURS Single corporate 1945 DASSAULT SYSTEMES 1951 RHODIA Single corporate 1946 SYLEA 1954 FIVES-LILLE Single corporate 1947 DAUPHIN OTA 1955 ALGECO Single corporate 1948 ST DUPONT 1955 Spread corporate 1952 BOUYGUES OFFSHORE 1958 TECHNIP State 1952 EXEL INDUSTRIES 1960 ENTRELEC GROUP Spread corporate 1953 MANITOU 1963 State 1953 RADIALL 1965 SIDEL Single corporate 1955 CONTINENT.ENTREPR. 1966 CNIM CONSTR. Single corporate 1956 BRICORAMA 1968 FONCIERE KLEPIERRE Single corporate 1957 DEVEAUX 1970 ROYAL CANIN Single corporate 1957 INTERTECHNIQUE 1971 COFLEXIP State 1962 PCAS 1974 GUY DEGRENNE Single corporate 1963 MECATHERM 1974 VIA BANQUE Single corporate 1964 HACHETTE FILIPAC.N 1975 ISIS State 1967 ADECCO 1977 I.M.S. Single corporate 1967 WALTER 1978 ASSUR.BQ.POPULAIRE Single corporate 1968 COFIDUR 1978 SIPAREX Spread corporate 1968 GFI INDUSTRIES 1982 ASSYSTEM State 1968 GROUPE JC DARMON 1982 ATOS Single corporate 1968 SOPRA 1982 DEXIA FRANCE Spread corporate 1968 UNILOG 1984 SEITA Spread corporate 1968 1986 ALCATEL Spread corporate

16 1969 HYPARLO 1987 STMICROELECTRONICS Mutual/cooperative

1970 GFI INFORMATIQUE 1990 FACTOREM Mutual/cooperative 1973 GROUPE PARTOUCHE 1992 ALSTOM Spread corporate 1973 LECTRA SYSTEMES 1997 UNION ASSUR.FDAL State

1974 BRIOCHE PASQUIER CIC UNION EURO.A Mutual/cooperative 1974 INFO REALITE 1976 ARKOPHARMA 1976 GUERBET

1976 SECHE ENVIRONNEM.

1977 NORBERT DENTRESS. 1979 LDC 1979 PATHE 1980 INGENICO 1981 GRANDVISION ALTRAN 1982 TECHNOLOGIE 1982 FININFO Patrimonial Firms 1982 FRAIKIN (continued) 1983 CEGID 1989 LVL MEDICAL GROUPE 1983 ROCHEFORTAISE 1989 PENAUILLE 1985 GAUTIER FRANCE 1990 LEON DE BRUXELLES

1986 M6-METROPOLE TV 1993 APRIL

1986 UBI SOFT ENTERTAIN PHYTO LIERAC

1987 INFOGRAMES ENTERT. REYNOLDS

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Split of SBF 250 by sectors at end December 1993 & 1998 Table 6

SECTOR 1993 1998 Agro alimentary 4 9 Automobile 5 5 Construction 6 5 Energy/Utilities 15 10 Finance/Insurance 31 25 F.M. Consumer Goods 11 15 Gen Industry 37 48 Hi technology 9 22 Holding 38 17 Luxury 5 7 Media 12 15 Pharmacy 4 10 Property 32 18 Retail 23 22 Services - General 4 9 Services - Leisure/Tourism 8 8 Transport 4 4

TOTAL 248 249

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Distribution of patrimonial businesses by sector in SBF 250 1998 Table 7

Number of companies Total Patrimonial % of total

Agro alim 9 6 66 Auto 5 4 80 Construction 5 2 40 Energy 10 2 20 Finance 25 2 8 FMCG 15 11 73 Gen Ind 48 22 46 Hi tech 22 16 73 Holding 17 15 88 Luxury 7 7 100 Media 15 12 80 Pharma 10 7 70 Property 18 4 22 Retail 22 18 82 Services - general 9 7 78 Services –leisure/tourism 8 4 50 Transport 4 2 50

TOTAL 249 141 57

19 Distribution of patrimonial businesses by sector in SBF 250 1993 Table 8

Number of companies Total Patrimonial % of total

Agro alim 4 2 50 Auto 5 4 80 Construction 6 2 33 Energy 15 3 20 Finance 31 2 6 FMCG 11 8 73 Gen Ind 37 19 51 Hi-tech 9 4 44 Holding 38 29 76 Luxury 5 5 100 Media 12 6 50 Pharma 4 1 25 Property 32 7 22 Retail 23 20 87 Services -general 4 2 50 Services – leisure/tourism 8 4 50 Transport 4 2 50 TOTAL 248 120 48

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Distribution of patrimonial businesses by sector in SBF 120 1998 Table 9

Number of % of total SECTOR Total in sector firms in sectors Agro alim 2 1 50 Auto 4 3 75 Construction 6 2 33 Energy 7 2 29 Finance 13 - - FMCG 9 6 67 Gen Ind 25 10 40 Hi tech 10 5 50 Holding 4 3 75 Luxury 4 4 100 Media 10 6 60 Pharma 4 1 25 Property 6 1 17 Retail 10 8 80 Services - general 1 - 0 Services - leisure/tourism 3 1 33 Transport 2 1 50 TOTAL 120 54 45

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Capitalisation of patrimonial businesses by sector in SBF 250 1998 Table 10

Cap. of Patrimonial Total cap. of SECTOR patrimonial % cap of sector (billion ff) (billion ff) sector

Agro alim 51 22 43 Auto 175 115 66 Construction 64 39 61 Energy 609 22 4 Finance 798 3 - FMCG 216 57 26 Gen Ind 519 85 16 Hi-tech 743 164 22 Holding 83 81 98 Luxury 423 423 100 Media 370 82 22 Pharma 285 64 22 Property 83 14 17 Retail 524 493 94 Services -general 56 53 95 Services - leisure 107 50 47 Transport 23 9 39

TOTAL 5 130 1 781 35

22 Capitalisation of patrimonial businesses by sector in SBF 250 1993 Table 11

Cap. of Patrimonial Total cap. of patrimonial business % SECTOR sector (billion ff) businesses(billion cap of ff) sector Agro alim 37 13 35 Auto 84 81 96 Construction 39 20 51 Energy 454 12 3 Finance 500 11 2 FMCG 123 52 42 Gen Ind 398 82 21 Hi-tech 56 19 34 Holding 109 82 75 Luxury 156 156 100 Media 79 37 47 Pharma 80 11 14 Property 86 18 21 Retail 189 178 94 Services -general 12 9 75 Services - leisure 53 9 17 Transport 37 4 11

TOTAL 2 493 794 32

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Capitalisation of patrimonial businesses by sector in SBF 120 1998 Table 12

Cap. of Patrimonial Total cap. of SECTOR patrimonial % cap of sector (billion ff) (billion ff) sector

Agro alim 30 5 17 Auto 170 110 65 Construction 64 39 61 Energy 600 21 4 Finance 735 - 0 FMCG 211 53 25 Gen Ind 493 75 15 Hi-tech 715 136 19 Holding 39 37 95 Luxury 395 395 100 Media 356 69 19 Retail 477 448 94 Services - 4 - general Services - 98 42 43 leisure Pharma 279 57 21 Property 32 6 19 Transport 19 7 37

TOTAL 4 717 1 500 32

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SBF 250 1998: ownership levels of patrimonial and non-patrimonial firms Table 13

Capitalisation % SBF TYPOLOGY Number % of typology 250 (billion ff) Cap Patrimonial Patrimonial firms Absolute (67 -100%) 28 20 104 2 Majority (50- 67%) 52 37 640 13 Minority (33 – 50%) 37 26 573 11 Relative (<33- more than double) 13 9 324 6 Marginal (<33- less than double) 11 8 140 3 Total 141 100 1 781 35 Non-patrimonial Single corporate Absolute (67 -100%) 14 26 60 1 Majority (50- 67%) 13 25 280 6 Minority (33 – 50%) 15 28 173 3 Relative (<33- more than double) 6 11 371 7 Marginal (<33- less than double) 5 9 34 1 Total 53 100 918 18 Spread corporate 33 100 1 771 34 State Majority (50- 67%) 5 38 469 9 Minority (33 – 50%) 4 31 77 2 Relative (<33- more than double) 2 15 9 - Marginal (<33- less than double) 2 15 8 - Total 13 100 563 11 Mutual Majority (50- 67%) 3 33 16 - Minority (33 – 50%) 2 22 74 1 Relative (<33- more than double) 3 33 7 - Marginal (<33- less than double) 1 11 - - Total 9 100 97 2 TOTAL 249 100 5 130 100

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SBF 250 1993:ownership levels of patrimonial and non-patrimonial firms Table 14

% SBF Capitalisation (billion TYPOLOGY Number % of typology 250 ff) Cap Patrimonial Patrimonial firms Absolute (67 -100%) 29 24 121 5 Majority (50- 67%) 32 27 181 7 Minority (33 – 50%) 41 34 273 11 Relative (<33- more than double) 11 9 177 7 Marginal (<33- less than double) 7 6 42 2 Total 120 100 794 32 Non-patrimonial Single corporate Absolute (67 -100%) 20 28 212 8 Majority (50- 67%) 28 40 200 8 Minority (33 – 50%) 18 25 121 5 Relative (<33- more than double) 5 7 26 1 Total 71 100 559 22 Spread corporate 23 100 755 30 State Absolute (67 -100%) 11 39 55 2 Majority (50- 67%) 7 25 150 6 Minority (33 – 50%) 51866 3 Relative (<33- more than double) 1 4 2 - Marginal (<33- less than double) 41495 4 Total 28 100 368 15 Mutual Absolute (67 -100%) 1172 - Minority (33 – 50%) 2333 - Relative (<33- more than double) 1172 - Marginal (<33- less than double) 23310 1 Total 6 100 17 1 TOTAL 248 100 2 493 100

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SBF 120 1998: ownership levels of patrimonial and non-patrimonial firms Table 15

Capitalisation % SBF TYPOLOGY Number % (billion ff) 250 Cap Patrimonial Patrimonial firms Absolute (67 -100%) 3 5 39 1 Majority (50- 67%) 16 30 484 10 Minority (33 – 50%) 18 33 525 11 Relative (<33- more than double) 9 17 316 7 Marginal (<33- less than double) 8 15 136 3 Total 54 100 1 500 32 Non-patrimonial Single corporate Absolute (67 -100%) 5 18.5 38 1 Majority (50- 67%) 5 18.5 223 4 Minority (33 – 50%) 9 33 154 3 Relative (<33- more than double) 5 19 370 8 Marginal (<33- less than double) 3 11 33 1 Total 27 100 818 17 Spread corporate 27 100 1 766 37 State Majority (50- 67%) 4 40 468 10 Minority (33 – 50%) 3 30 75 2 Relative (<33- more than double) 2 20 9 - Marginal (<33- less than double) 1 10 7 - Total 10 100 559 12 Mutual Majority (50 – 66.6%) 2 100 74 2 TOTAL 120 - 4 717 100

27 Ownership levels of patrimonial firms entering SBF 250 1998 Table 16

% Levels No. firms 1998 Absolute (67 -100%) 16 Majority (50- 67%) 26 Minority (33 – 50%) 14 Relative (<33- more than double) 4 Marginal (<33- less than double) 6 TOTAL 668

Changes of ownership levels for companies present in SBF 250 in 1993 and 1998 Table 17

Change in ownership No.of patrimonial firms Increased % level 14 Decreased % level 15 Stayed at same level 45 TOTAL 74

8 Figures do not include Moulinex which came in to patrimonial ownership of Torelli family after mutual ownership in 93 28

Patrimonial firms increasing level of ownership Table 18

% Levels No. firms 1993 No. firms 1998 Absolute (67 -100%) 4 Majority (50- 67%) 1 8 Minority (33 – 50%) 9 2 Relative (<33- more than double) 2 - Marginal (<33- less than double) 2 - TOTAL 14 14

S 6 of 14 companies increasing ownership levels are SBF 120 companies S Small % changes where firms cross levels of ownership ie minority to majority: CGIP - Marine Wendel – an ownership increase from 48% to 51% – an increase of Dassault Industries stake from 49% - 51% Francarep - Rothschild stake increases from 59% – 68% Promodes - Halley stake increases from 31% – 37% Primagaz - SHV stake increases from 49% – 50.10%

S Changes involving patrimonial holding and portfolio companies Albatros Investment - Buying out 24% AGF stake Fonciere Euris - increased stake from 56% - 67% Worms et Cie - 37%-54% Francarep - as above CGIP – as above

S Changes in increased ownership levels involving foreign-owned companies Cerus Europ – De Benedetti - 49% -55% Ciments francais - Italcementi- 29%-controlling majority Primagaz - as above

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Patrimonial firms decreasing level of ownership Table 19

% Levels No. firms 1993 No. firms 1998 Absolute (67 -100%) 8 Majority (50- 67%) 2 4 Minority (33 – 50%) 3 3 Relative (<33- more than double) 2 4 Marginal (<33- less than double) - 4 TOTAL 15 15

S A much higher number of SBF 120 companies among those decreasing their stake. Only 3 companies - Sefimeg, Christian Dior and Dynaction are not SBF 120 companies. Bouygues, Castorama Dubois, Cap Gemini, Chargeurs, Colas, Hermes, Lagardere, Michelin, Publicis, Remy Cointreau, Sefimeg,Valeo, and Zodiac are all SBF 120 companies

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Different forms of control of patrimonial businesses

The following examples illustrate some forms of control of companies by individuals.

Entrenched capital control with no other significant shareholder i.e more than 10% – Clarins – 67% capital, Bollore – 74%

Among firms with relative/marginal ownership, we find:

Share control with dispersed capital ownership of other shareholders– Peugeot 22% capital with no other significant shareholders

We also found several features of control among patrimonial businesses according to different levels of ownership:

Pacts were a more noticeable feature of control among the relative/ marginal owned SBF 250 firms in 1998. Of the 24 patrimonial businesses in 1998 with relative/marginal (less than 33% control), we find that at least 6 of 24 businesses operate pacts to protect their control. Examples of this form of control include Carrefour where the principal stipulations of the five year pact concern the composition of the Conseil d’Administration. In the case of Dassault Aviation the pact exists between the State, Aerospatiale and Dassault Industries and is primarily concerned with precisely defining roles and managing the strategic partnership in terms of the proportion of stakeholdings in Dassault. With Sefimeg the pact was primarily with Mutuelles du Mans Assurances.

Further, we found that across all types of patrimonial businesses, there was a tendency for families to support smaller capital stakes in addition to their main stake described above. This takes the form of consolidating stakes, usually of between 5 -10%, controlled by individual named family members or named individuals.

This consolidating stake often allowed family to cross legal thresholds ie 50 %, and not disperse ownership outside families – Clarins, SMOBY and Manitou are examples of this tendency.

In the case of Guilbert we see a 4% family share which is residual stake offering financial return rather than control in the form of the consolidating interest discussed above.

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Examples of control of patrimonial business S Single family direct control by family stake – Bic S Single family direct control by family members’ stakes - Dauphin S Control by more than one family with pact – Etam S Single family control by holding company – L’Oreal S Control of portfolio holding company by family – Francarep S Control of portfolio holding by more than one family – Rue Imperiale de Lyon S Single family control by ‘cascade’ of holding companies – Fimalac, Bollore, LVMH S Dual family control by separate holding companies - SMOBY S Control of company by non-French family – Primagaz, Ciments Francais S Control of company by named private individuals - Infogrames Thus we see, for example, in the case of Rue Imperiale de Lyon:

Rue Imperiale de Lyon Control of portfolio holding by more than one family

Familles Weill, Meyer, Bernheim, Guyot 100%

Haussmann Percier

42% Rue Imperiale de Lyon 55% 21.2%

Immobiliere Marseille Eurafrance

49.2% 21.2% Gaz & Eaux

The types of patrimonial business are further illustrated in mappings below.

32 Bic Single family direct control by family stake

Famille Bich

34%

Societe Bic

L’Oreal Single family control by holding company

Mme L. Bettencourt Nestle Gesparal 51% 49%

57% L'Oreal

33 Cap Gemini Control of portfolio holding company by family

Wendel Participations

49% Marine Wendel

51% CGIP

25.5% Cap Gemini

SMOBY Dual family control by separate holding companies

SMOBY

Moquin Famille Breuil Famille Controle Controle AJCP CGM Gestion 46% MOB SA 52%

60% plus Additional 5% stake SMOBY SA

34 Bollore Single family control by ‘cascade’ of holding companies

Vincent Bollore 100% Financiere V 51% Sofibol 48% Financiere Odet 48% 59% Albatros Investment Glenans 69% Bollore Technologies 37% Financiere Terre rouge 80% 70% Mines Kali Sainte Therese Compagnie de Cambodge

Pinault Printemps Redoute

Single family control by ‘cascade’ of holding companies

Famille Pinault 74% Pinault Finance 99% Artemis 43% 100% 33% Pinault Printemps Redoute Financiere Sefimeg Sefimeg 99% 55% 27% SA Prodis Guilbert Famille Guilbert 71% Residual stake of 4% held by family

35 Primagaz Control of company by non-French family Fentener van Vlissingen Famille

Control SHV BV

50% Primagaz

Infogrames Control of company by named private individuals

Founders

100% Interactive partners 26% Infogrames Entertainment

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Sources

SBF 120 & 250 index listings 1993 & 1998- Centre de documentation, Société de Bourse Française

Dictionnaire DAFSA Desfossés des Sociétés éditions 1993, 1994, 1998, 1999

Company annual reports

DAFSA liens CD ROM base de données 1999

Reuters Business Briefing

Lexis Nexis

Investext

Amadeus

Datastream

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