France has blocked the purchase of the French units of Canada’s Velan Inc. by US-based Flowserve Corp., effectively scuppering a deal between US and Canadian companies in the name of its own strategic autonomy.
(Bloomberg) — France has blocked the purchase of the French units of Canada’s Velan Inc. by US-based Flowserve Corp., effectively scuppering a deal between US and Canadian companies in the name of its own strategic autonomy.
The move highlights President Emmanuel Macron’s determination to secure key industries from foreign takeovers, even by US companies; especially when it comes to the generation of nuclear power.
After months of deliberations, France decided to oppose the purchase of Velan SAS and Segault SAS by the Texas-based company because of their strategic importance to the French nuclear and defense industries, an official at the finance ministry said. Late Thursday, the management of Velan said Flowserve was ending the merger pact in the light of the French refusal. Bloomberg first reported in April that France was seeking to scupper the takeover. The decision was taken just days before the expiration of the merger agreement on Oct. 7.
Flowserve had agreed to buy the Quebec-based business for C$329 million ($247 million) in February, but people familiar with the deal told Bloomberg that it could be scotched in the event of a French refusal. Segault and Velan are both deemed critical to France’s civil and military nuclear industries.
An official at the French finance ministry said he didn’t expect the decision would impact the US-France relationship, and that Flowserve was always welcome to France for other business.
Macron hasn’t been shy about intervening in foreign acquisitions. His government derailed a merger between French and Italian automakers Renault SA and Fiat SpA in 2019, and the takeover of French grocery chain Carrefour SA by Canada’s Alimentation Couche-Tard Inc. in 2021.
It’s unclear whether or not Velan will seek another buyer. It said in a statement that it would continue operating as an independent business.
Segault is a key supplier to French state-owned nuclear-propelled submarine maker Naval Group SA, and provided equipment for the Charles de Gaulle aircraft carrier. Velan, which generates about 25% of its revenue in France, produces technologies fundamental to the maintenance of Electricite de France SA’s equipment. Macron has decreed nuclear power a priority for France’s future, particularly in light of its ambition to cut emissions.
The president has been expanding the scope of the industries that France deems strategic and lowered the threshold to trigger a government review in the event of a foreign takeover, a system similar to the US’s Committee on Foreign Investments known as CFIUS. In France, those sectors include nuclear technology, semiconductors and food security.
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