Economic patriotism

I was reviewing a document that our M&A professor gave us today: it's the list of all M&A deals in 2005 from Investment Dealer's Digest and it provides interesting statistics.

French companies have been really active overseas and France was also a good market for foreign buyers:

• France is the third most active country for acquisitions in the US (behind Canada and the UK) with 60 deals worth $6bn and conversely, US companies have made 75 acquisitions in France worth $11bn, making France its fifth most attractive country
  
• France is the second biggest buyer of other EU companies behind The Netherlands with 199 deals worth $75.1bn and conversely, 165 acquistions have been performed in France by EU companies, worth $19bn

At least for EU cross-border deals, France shows a net gain of more than $55bn. This could rapidly go down the pipe if the French government continues it's economic patriostism policy (ie: protectionism) such as in the case of Arcelor or Suez, since it will most likely generate a backlash against French companies.

In particular in the Suez case, Enel should make its bid for Suez and the French government should not oppose it. Gaz De France could still counterbid or E.On could play the role of a white knigt but in the end, Suez shareholders should be able to evaluate more than one offer and settle for the one that offers the most value.

To be fair to the French, many other countries are doing the same (or even worse): Spain talks about preventing E.On to buy Endesa and the US Congress is trying to prevent a Dubai based company to buy some US port operations for national security concerns. Even the UK hinted earlier this year that it would take a hard look at a possible bid from Gazprom against Centrica.

For a round up on the return of protectionism around the world, have a look at this article from The Economist.