Friday, April 12, 2024

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France has prevented an American acquisition of nuclear suppliers.


The French economy ministry announced on Friday that France has rejected the purchase of nuclear component suppliers Segault and Velan SAS by the American company Flowserve.

The acquisition received attention earlier this year as both the opposing party and the government used it as a means to test France’s goals for industrial sovereignty. Economy Minister Bruno Le Maire has been navigating the balance between making France an appealing investment location while also preserving sovereignty in areas of critical technology.

Earlier this year, Flowserve, a major American company specializing in industrial machinery, announced their plans to acquire Velan, a Canadian group that specializes in industrial valves. Following this announcement, French officials expressed interest in investigating the deal and potentially separating Velan’s French subsidiaries (Segault and Velan SAS) for strategic purposes.

As a result of the French rejection, Flowserve has declared that it will no longer pursue its goal of acquiring Velan on a global scale.

Segault is a lesser-known company located in Essonne, France. They provide parts for nuclear-powered submarines constructed by the government-owned Naval Group and also produce industrial valves used on the country’s primary aircraft carrier, the Charles de Gaulle. Velan SAS, based in France, also supplies parts for French nuclear power plants.

In May, the defense minister of France, Sébastien Lecornu, expressed disagreement with the acquisition. However, the decision on investment screening procedures ultimately rests with the country’s economy minister, and this was finalized 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.

Flowserve stated that they do not agree with the decision made by the French government, as it goes against their goal of promoting foreign investment in the French economy.

On Friday, an official from the French economy ministry supported the decision and emphasized that the nationality of the purchaser was not the sole factor in rejecting the agreement.

“If there are significant security concerns, we will not hesitate to block a transaction, regardless of the negative impact it may have on investors,” stated an anonymous official discussing a sensitive matter. “We are adhering to traditional rules and the Americans are doing the same, but I do not believe this will further escalate tensions.”

The French authorities are proud of consistently being selected as the European Union’s top destination for foreign investors. However, Le Maire has not shied away from exercising his veto authority in politically delicate situations.

In recent years, prior to the COVID-19 pandemic, France has consistently strengthened its regulations on screening investments. In August of this year, it declared plans to increase scrutiny on foreign acquisitions even more.