Eramet eyes CAC 40 after share price soars

PARIS, Feb 21 (Reuters) - The share price of French metals group Eramet has catapulted it into the ranks of France's 40 biggest companies by capitalisation and raised questions over whether it should join the CAC 40, its chief executive said.

Eramet (ERMT.PA: Quote, Profile, Research) shares have more than tripled since the start of 2007 due to high nickel and manganese prices.

CEO Patrick Buffet told analysts on Thursday that bankers had suggested it should be part of France's blue-chip index .FCHI.

After rising 11 percent on strong 2007 earnings on Thursday the company is worth 12.5 billion euros at current prices. That would make it about the 31st biggest name in the index, though a company's overall size alone is not what decides index membership.

"I think that it would be in the interest of the group to have a larger float given that our stock capitalisation puts us in the list of 40 biggest French companies," Buffet said.

Such a move would help Eramet to make acquisitions in the future by using shares as well as cash, Buffet told Reuters.

Around 15 percent of Eramet is now floated on the stock market, excluding the holdings of investment funds, Buffet said.

Under stock exchange rules, CAC 40 membership depends on a combination of the value of a company's freely traded float and liquidity, but there are no hard and fast rules. Recommendations are made by a specialist panel which advises Euronext.

A company's weighting in the index cannot exceed 15 percent. Bottom of the ladder currently is airline Air France KLM (AIRF.PA: Quote, Profile, Research) with an index weighting of 0.5 percent.