The French government, facing talk of a Brazilian takeover bid for French metals and mining company Eramet SA and interest from foreigners in a privatization of its large toll-road companies, plans new measures to keep key industries in French hands.
In the next few weeks, the government will publish a list of strategic sectors that it wants to protect from foreign takeovers, Industry Minister Francois Loos said in an interview with the newspaper Les Echos.
France also will implement a new European takeover directive, he added. A spokeswoman for the minister confirmed his remarks.
Loos didn't specify which sectors the government wants to protect, but he said Eramet is more strategically important for France than food processor Groupe Danone SA.
Speculation last month that U.S.-based PepsiCo wanted to buy Danone sparked a flurry of warnings aimed at Pepsi by the French political establishment, including Prime Minister Dominique de Villepin, who said he would "defend the interests of France."
Loos's remarks are the latest in a string of moves by French leaders in recent years aimed at either protecting French companies from foreign takeovers or aiding French companies in acquisitions of their own.
The Wall Street Journal reported last week that Brazilian mining company Companhia Vale do Rio Doce was interested in bidding for Eramet. Both companies have denied the report.
The French government owns a 28 percent stake in Eramet, a big mining company based in Paris whose operations include nickel mines in the French overseas territory of New Caledonia. The French Finance Ministry has declined to comment on Eramet.
Loos's comments risk alarming foreign institutional investors just as France is preparing for the partial privatization of electricity company Electricite de France in the fall. The government intends to sell between $9.8 billion and $13.5 billion of EdF's shares in what would rank as one of Europe's largest initial public offerings. Shielding French companies from the possibility of takeover means that investors in French shares might not be able to realize maximum value from their stakes.
However, Loos said in Monday's interview that a precise definition of strategic sectors by the government would give more transparency to foreign investors. "It is not our policy to oppose in principle every acquisition of a French company. It is to strengthen the competitiveness and independence of our companies and to see that they can fight with the same weapons as their foreign peers," he said in the interview with Les Echos.
Foreign companies, including Australia's Macquarie Infrastructure Management and Italy's Autostrade SpA, have recently bid for stakes in one or more of the three toll-road groups that the French government is selling -- Autoroutes du Sud de la France, Autoroutes Paris Rhin Rhone and Sanef. The government has announced that 18 investors -- both French and foreign companies -- have expressed interest. But the sale of the toll-road stakes is sparking opposition from politicians who see the companies as national treasures.
The new list of sectors that the government wants to keep in French hands may include transport, pharmaceuticals, biotechnology, electronics and defense, food and energy. In an interview with the Journal last year, then-Prime Minister Jean-Pierre Raffarin signaled that Paris would oppose any foreign takeovers of companies in these industries.
France also plans to implement a European directive on takeover bids that would allow target companies to use the same defense tactics that are allowed in the home country of the bidder, Loos added. European Union member states have until March to implement this new directive, but so far no member state has done so.
It won't be clear whether France is breaking any E.U. rules by publishing a list of strategic companies until the contents of the list are known, said a spokesman for the European Commission, the E.U.'s executive body.
The spokesman noted that it is common among E.U. countries to protect certain sectors, such as defense. "We have no reason to think that the French authorities will not respect European Union law," he said.