When it comes to industrial equipment manufacturers, certain parts are more strategic than others. This is the case with high-tech fittings.

After a six-month review, the Finance Ministry rejected the change of shareholder of two French-based equipment manufacturers: Segault in Essonne, which supplies some critical parts for the boiler rooms of nuclear submarines and the French Navy’s aircraft carrier (Charles-de-Gaule), and Velan SAS in near Lyon, which supplies EDF with important valves for its nuclear reactors.

Flowserve leaves Velan

The Minister of Economy Bruno Lemaire officially communicated this refusal on Thursday October 5th to the American company Flowserve, which wanted to buy the Canadian company Velan, which itself owns 100% of the capital of the two French SMEs.

Flowserve immediately took action on this decision and announced that this refusal scuppered its plan to purchase Velan. A way to subsequently demonstrate the added value of French know-how for the Texas company.

Last February, Flowserve made a $245 million offer to buy the entire Canadian family-owned company Velan, which, including the two French units, has a total of 12 factories and 1,660 employees. The Texas company planned to complete the acquisition last June.

American disappointment

“We are very disappointed with the French government’s decision,” said Flowserve CEO Scott Rowe, “and we do not believe it meets the French government’s stated goal of encouraging foreign investment in the French economy,” adding that he believes that he has given all the necessary guarantees to answer the questions raised in Paris.

Flowserve is abandoning its offer for now, saying it is not relevant without the French branch of the Canadian group, especially since the products made in France were complementary to its own. The activities of Velan SAS and Segault would represent 100 million euros of activity (85 million for Velan and almost 15 million for Segault), or a third of the Velan Group’s turnover.

Strategic companies

What will this one do? The Quebec industrial valve specialist has not responded for the time being and has contented itself with acknowledging the withdrawal of Flowserve’s offer.

The decision is considered excellent news in the Federal Ministry of Defense, which was quick to warn of the dangers this transfer would pose to the sovereignty of its nuclear deterrent forces. Last May, the Minister of the Armed Forces promised parliamentarians he would veto the sale of Segault. Bercy went one step further by also defining Velan SAS as a strategic company.