France blocks American takeover of nuclear suppliers - POLITICO Europe
France blocks American takeover of nuclear suppliers - POLITICO
PARIS — France has vetoed the acquisition of nuclear parts suppliers Segault and Velan SAS by American group Flowserve, the French economy ministry said Friday.
The deal came under the spotlight earlier this year, when both the opposition and the government turned the takeover into a political test for France’s industrial sovereignty ambitions. French Economy Minister Bruno Le Maire has been walking the tightrope between maintaining France as an attractive investment destination and maintaining sovereignty when it comes to strategic technology.
When American industrial machinery giant Flowserve announced earlier this year its intention to take over Canada’s industrial valves group Velan, French authorities signaled they would look into the deal to potentially carve out Velan’s French subsidiaries (Segault and Velan SAS) based on strategic reasons.
Following the French veto, Flowserve announced it would abandon its plans to take over Velan worldwide.
Segault — a small firm in France’s Essonne department virtually unknown to most French people — supplies components for nuclear-propelled submarines built by state-owned shipbuilder Naval Group, and makes industrial valves that are used on France’s flagship Charles de Gaulle aircraft carrier. Velan SAS (France) supplies components for French nuclear power plants.
Back in May, France’s defense minister Sébastien Lecornu also opposed the takeover. But France’s economy minister has the final word on investment screening procedures, which concluded this week.
Friday’s decision risks fueling new tensions between France and the U.S., following a string of ups and downs in recent years.
“We do not believe the decision aligns with the French government’s stated goal of encouraging foreign investment into France’s economy,” Flowserve said in a statement.
A French economy ministry official on Friday defended the decision and stressed that the nationality of the buyer was not the only criteria to block the deal.
“In a situation where security issues are substantial, we do not hesitate to block a transaction, even if it’s obviously bad news for any investor,” said the official who was granted anonymity to discuss a sensitive file. "We are following rules in a classic way and the Americans do the same on their side, but I don't think this is likely to increase tensions.”
The French government takes pride in being repeatedly chosen as the EU’s most attractive country for foreign investors. But Le Maire has not hesitated to use his veto powers for politically sensitive cases.
Over the past years, and even before the coronavirus crisis, France repeatedly tightened its investment screening rules. In August this year, it announced it would further tighten its screenings of foreign takeovers.
Related Knowledge Center: ENERGY BASICS: nuclear
Nuclear energy provides almost 20 percent of the U.S. electricity supply. Advocates have called for an expanded role for nuclear as an emissions-free fuel source. But the economics of building new reactors are daunting. In addition, lingering safety concerns are an institutionalized part of the calculation of nuclear regulation, and highly radioactive nuclear waste remains a can that public officials have been inclined to kick down the road. The Energy Information Administration projects a sharp decline in nuclear power generation over the next decade, as new nuclear plants — two are planned — are more than offset by anticipated retirements of several operating reactors.