Paris vs Washington: France looks to block US purchase

Velan is due to be bought by Flowserve as part of bigger deal, but French-backed fund is expected to take over Segault SAS soon, Bloomberg reports.

The move comes as President Emmanuel Macron urges Europe to develop more autonomy to make the continent more independent in future crises. France and other European countries are also re-thinking their supply chains to bring production of key equipment and technologies back to the region.

France is looking at ways to prevent Velan SAS, a domestic supplier of parts for nuclear reactors, from falling into US hands as it aims to protect a strategic industry.

The business is a French unit of Quebec-based Velan Inc., which is being taken over by Flowserve Corp. in an all-cash transaction valued at about C$329 million ($247 million). The deal was expected to close by the end of the second quarter and has been delayed.

French nuclear-submarine parts supplier Segault SAS has already been carved out of that deal following government efforts to bring a key technology into domestic ownership, with a fund lined up to buy it in the coming weeks, according to people familiar with the matter.

Paris has now turned its focus to Velan’s business in France and could either block its purchase or set restrictions, said one of the people, who spoke on condition of anonymity about private discussions. A decision is expected soon.

Some French lawmakers have been sounding the alarm about the Flowserve takeover and its possible impact on businesses in France. Velan SAS, formerly part of Alstom SA, supplies parts to state-owned utility Electricity de France SA.

“It’s not just defense industries that are strategic — the nuclear industry is key for France’s economic recovery and its transition,” Marie-Noelle Lienemann, a Socialist senator, told Bloomberg. “If the US gains control over a maker of equipment for EDF, they could be able to prevent the export of French nuclear reactors to China.”

Velan, which reported a loss in the first quarter, generates about 25% of its revenue in France. Its French unit supplies valves and services for nuclear power, cryogenics, liquefied gases, marine, superconductivity and space with more than 300 nuclear power plants equipped worldwide, according to the company.

Segault is a key supplier to French state-owned nuclear-propelled submarine maker Naval Group and provided equipment for the Charles de Gaulle aircraft carrier.

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