CNBC Comment: It’s vive la difference for European M&A
CAN THERE be a clearer illustration of the difference between French and British attitudes to business than this week’s M&A headlines? Once again, the French have been accused of erecting the barricades to repel an Anglo-Saxon corporate takeover, while there is a deafening silence in Westminster about a jewel in British pharma potentially being gobbled up in a $100bn deal.
To recap, although it may now be softening its stance, Francois Hollande’s government has seemingly been resurrecting its long-term industrial policy to potentially thwart GE’s $13bn bid for certain power assets owned by Alstom, even turning to Germany’s Siemens to prevent the potential tie-up. Funny that the French should see Siemens as a white knight, given that its chief executive Joe Kaeser has been scything jobs to turn around the German behemoth.
At the same time, US pharma giant Pfizer is back in the bidding for AstraZeneca, in a deal that could see another massive chunk of corporate UK fall into foreign hands.
It’s easy to take the line that the French are putting their finger in the dam preventing the globalisation onslaught, while the British are right to allow free trade and healthy cross-border trade. After all, it’s Britain’s open attitude to markets and trade that has got us back on track, right? And it’s the French attitude to the irrational protection of jobs that has left them in the economic mire?
Maybe, but deep down I can’t help but admire a nation that fights tooth and nail for its firms, jobs and identity. Go on, admit it, it hits a jingoistic nerve every time a UK company is the one doing the buying rather than being the prey. You only have to look at the Kraft-Cadbury deal to see what a sulk we get into every time one of our big companies gets gobbled up.
Actually, differing attitudes to cross-border deals in the UK and France may have little input into the ultimate success of corporates. According to the immensely successful chief executive of French company Dassault Systemes, it really comes down to labour flexibility and tax. Even Hollande should be able to work out that, if companies are effectively paying 38 per cent corporation tax in France, while they can get away with a headline rate of just 21 per cent across the Channel, something has got to give.
Of course, most employees of AstraZeneca probably couldn’t give a jot whether they are employed by a US or UK company, especially since only about half of them even work in Britain. And as for Alstom, the truth is that fewer than 20 per cent of its employees even work in France. Nice, then, that the French government is protecting such a French institution.
Steve Sedgwick is an anchor on CNBC.