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M&A and Foreign Investment Control: From Veto to Governance, Towards a National and European Standard

Insights M&A and Foreign Investment Control: From Veto to Governance, Towards a National and European Standard Olivia Lê Horovitz · M&A and Foreign Investment Control: From Veto to Governance, Towards a National and European Standard Walid Ghedira · March 11, 2026

The 2026 turning point (French “proxy board” and European “Industrial Accelerator Act”)

Eutelsat, LMB, Exaion, Biogaran, Doliprane/Opella: France foreign direct investment (“FDI”) screening regime no longer merely authorizes or prohibits; it now secures the implementation of transactions through governance and shareholding remedies (golden share, board seat, entry into the capital of a public or French player). It reaches a new stage in March 2026: a French bill on the “proxy board” and a European Commission regulation proposal (the “Industrial Accelerator Act”) seek to make certain foreign direct investments conditional on value-added criteria.

France foreign direct investment screening regime (“FDI”) has become, in 2025-2026, a central instrument of the State’s economic sovereignty policy.

According to figures published by the Ministry for the Economy (Bercy), 417 filings were reportedly submitted in 2025 to the Directorate General of the Treasury (against 392 in 2024), a record level over the decade. By way of comparison, 105 filings were submitted in 2014, the year of the “Montebourg Decree”, which broadened the list of sensitive sectors subject to prior authorization (defense, energy, telecoms, etc.)1.

Behind these figures, a clear policy line is emerging. France wants to remain attractive for foreign capital but no longer intends to be “open to all winds”. Bercy’s message is clear: investments are still welcome, provided they do not undermine business continuity, control over critical assets, or certain structuring decisions.

Above all, FDI regime is evolving alongside vetoes and conditional clearances, a logic of shareholding and governance “anchoring” is developing, via French investors (Bpifrance, industrial players) and/or specific State rights (preference share, board seat). This mechanism, visible in the Opella/Doliprane case, can now be found in other sensitive transactions (Biogaran, Exaion). The State does not necessarily block the deal, but obtains – beyond operational commitments – a presence in the capital and/or in governance bodies to secure the industrial trajectory, critical assets and irreversible decisions.

This shift reaches a new threshold in March 2026. At a national level, bill no. 25582 (tabled on 3 March 2026) aims to systematize governance remedies through an “alternative board of directors” (“proxy board”) vested with veto power; at European level, on March 4, 2026 the Commission presented a draft regulation COM(2026)100 (“Industrial Accelerator Act”) which would introduce, for certain strategic sectors, a conditionality regime for foreign direct investments (FDI) based on value added criteria (jobs, R&D, technology, sourcing).

1. Eutelsat: an explicit FDI veto on ground infrastructure

1.1. When refinancing logic clashes with sovereignty risk

Eutelsat, a European satellite telecommunications operator, had planned to sell a majority stake in its “passive” terrestrial infrastructure assets (ground antennas and connectivity elements) to the Swedish fund EQT Infrastructure VI, for an amount of around €550m3.

The aim was to contribute to deleveraging and refinancing of the OneWeb constellation in a context of increased competition from Starlink (SpaceX) and Kuiper (Amazon), and to prepare the future sovereign European constellation Iris².

However, at the end of January 2026, the Minister of the Economy refused to authorize the transaction under the FDI regime.

The government’s position is clear: the decision is linked to the critical nature of the business segment concerned – and not to the quality or nationality of the investor.

1.2. The satellite “ground segment”: a dual-use asset at the core of civil and military capabilities

Eutelsat’s ground stations connect satellites to terrestrial networks and support both civil and military uses. Eutelsat operates a GEO fleet (33 to 34 satellites) and, through OneWeb, a LEO constellation of more than 600 satellites, mainly serving institutional clients, governments, telecom operators and businesses. Eutelsat also provides services to the French army under a ten year framework agreement worth up to €1bn.

In this context, the State, which has become Eutelsat’s largest shareholder with a stake close to 30% of the share capital, considered that divesting the “ground” segment would create an excessive sovereignty risk by giving access to communications, technical and contractual control over the infrastructure, and continuity of operations in crisis scenarios.

1.3. Immediate financial cost, but medium-term security rationale

In the short term, the blockage deprives Eutelsat of the expected €550m and triggers a negative market reaction. But the company also highlights positive effects, which is no technically risky carveout, and an expected improvement in margin (notably due to savings on rents that would otherwise have been paid).

Above all, a few days later, on February 11, 2026, Eutelsat announced that it had secured around €1bn in financing from the French Export Credit Agency (ACE – Agence de Crédit à l’Exportation), backed by a French State guarantee, to support an order for 340 LEO satellites from Airbus Defense and Space (in addition to the 100 satellites already ordered)4.

Beyond the Eutelsat case, this veto illustrates a turning point. When an asset directly touches the core of sovereignty (communications, space, defense), the State no longer hesitates to impose a straightforward blockage, even at the price of an immediate financial cost.

2. LMB Aerospace: FDI green light with conditions, including a golden share5

2.1. An important defense asset, but not irreplaceable

The acquisition of LMB Aerospace, an aerospace and defense subcontractor (notably supplying cooling equipment integrated into sensitive programs), by the US group Loar was authorized on January 28, 2026, but subject to strict conditions. Here, the doctrine differs from that applied to Eutelsat. The asset is strategic, but the State considered that the risk could be managed through targeted remedies rather than by blocking the deal.

The result? Where Eutelsat faces a veto, LMB Aerospace receives a green light but subject to stringent conditions.

2.2. The golden share as a sovereignty insurance tool

The mechanism is based on the allocation to the French State Shareholdings Agency (APE – Agence des participations de l’État) of a preference share (“golden share”) enabling it to block certain strategic decisions and to ensure a state presence within the governance bodies. This is in addition to standard commitments of maintaining activities in France (including the site in Corrèze), protecting critical capabilities, and ensuring continuity of defense-related contractual relationships.

In the event of non-compliance with these commitments, Article L.151-3-1 II of the French Monetary and Financial Code provides for administrative, financial and criminal sanctions.

This scheme illustrates another face of French-style sovereignty. Rather than opposing foreign investment head-on, the State frames and conditions the transaction, granting itself targeted control levers.

3. Exaion: conditional clearance, “Francization” of governance rather than veto

The sale of 64% of Exaion (an EDF subsidiary specializing in high-performance computing, secure cloud and data hosting) to the US group Mara was authorized on February 20, 2026 subject to “binding” conditions. The core of the mechanism lies less in capital restrictions than in a governance architecture. Entry of NJJ (Xavier Niel’s investment vehicle) into the capital of Mara France, a board of directors dominated by French investors, and operational commitments aimed at preserving continuity of activities and control over sensitive assets.

4. Biogaran: opening to a foreign fund, with Bpifrance as anchor shareholder and a board seat

The acquisition of Biogaran (Servier group), France’s leading generics producer, by the UK fund BC Partners was authorized subject to conditions on January 30, 2026, with a clearly assumed intervention by Bpifrance in the capital (15%) and in governance (board seat). The commitments notably concern maintaining the headquarters and activities in France, employment, industrial/logistics continuity and securing the supply of patients and partners.

The parallel with Opella/Doliprane, whose sale to the US fund CD&R was completed on April 30, 2025, is instructive: in that case, the State had already sought a French “anchor” via Bpifrance (minority stake and board seat) to address health sovereignty concerns. However, the transaction had been the subject of a tripartite agreement between the State, Sanofi and CD&R in October 2024, even before the formal FDI authorization procedure. With Biogaran — and, in a different configuration, Exaion — the anchoring of a French player becomes a full-fledged FDI remedy, used as an alternative when a veto is neither desirable nor sustainable.

5. FDI 2025-2026: rare refusals, expanding governance remedies and European harmonization

Formal refusals remain rare. According to the 2024 FDI6 annual report by the Directorate General of the Treasury, six investments – including Photonis – Teledyne, Flowserve – Velan, Segault – Velan – have officially been vetoed over the past three years, not counting tacit refusals or withdrawals of filings before a formal decision was issued, as was the case with Carrefour – Couche-Tard.

The veto opposed to the Eutelsat deal nevertheless shows that, where a critical and hardly substitutable infrastructure is at stake, the State now assumes a straightforward blockage.

At EU level, the cooperation mechanism continues to gain momentum. According to the Commission’s 2025 report, 477 transactions were notified in 2024; 92% were closed within two weeks, only 8% underwent an in-depth review, and questions were exchanged in around 10% of cases.

6. 2026 turning point: parliamentary mission, bill of 3 March 2026 and Commission proposal of 4 March 2026 on industrial acceleration (“Industrial Accelerator Act”)

In the wake of the Eutelsat, LMB Aerospace and Exaion cases, on February 24, 2026 the government launched a parliamentary mission entrusted to three MPs (Christophe Plassard, Jean-Louis Thiériot, Charles Rodwell) to reassess the FDI framework in light of the German, Italian and Spanish regimes, to identify possible sectoral extensions (data, cloud, space, critical infrastructures, deep tech, etc.), and to better articulate national and European levels.

Above all, a bill tabled on March 3, 2026 on securing the French economy and defending7 our industrial sovereignty aims to move up a gear. It would introduce, into the Monetary and Financial Code, a new Article L.151-3-3 making it mandatory — including where authorization is granted without conditions — to set up an “alternative board of directors” (“proxy board”), composed exclusively of French nationals. This board would exercise veto rights over governance, organization or business transfer decisions, or over transfers of resources or know-how likely to affect the Nation’s essential interests; a State representative would sit on it as an observer (the proposal specifically refers to the Strategic Information and Economic Security Service – SISSE), and the minister could exempt the company from this mechanism by a specially reasoned decision.

Lastly, on March 4, 2026, the European Commission presented the “Industrial Accelerator Act” (IAA)8 in the form of a draft regulation. Among its most sensitive components is the introduction of “value added” criteria applicable to certain foreign direct investments: the mechanism would target investments above €100m in so-called “emerging and strategic” sectors (batteries and their value chain, electric vehicles and components linked to electrification/digitalization, photovoltaics, critical raw materials) where the investor comes from a country holding more than 40% of global manufacturing capacity in the sector concerned. In such cases, the investment could only be approved if it meets at least four out of six conditions (including one mandatory condition), among which: capping foreign shareholding/control at 49%; implementation through a joint venture with one or more EU entities (foreign participation ≤ 49%); licensing of intellectual property rights and know-how for the benefit of the EU target or asset and protection of pre-existing IP; annual R&D expenditure in the EU of at least 1% of the target’s or asset’s gross annual turnover (pro rata to the level of control); employment of at least 50% EU workers (mandatory condition), with training measures; and a strategy to strengthen European value chains including a sourcing target of at least 30% of inputs within the EU.

Conclusion

These recent cases show that France‘s FDI screening regime is no longer merely a screening mechanism. It has become an instrument of industrial and sovereignty policy, applied in a differentiated manner depending on the nature of the asset. When an infrastructure is deemed critical and hardly substitutable (such as the ground segment of a satellite operator), the veto once again becomes an accepted tool, even at the price of an immediate financial cost for the company. Conversely, when the asset is strategic but industrial alternatives or security margins exist, FDI regime favors a tailormade conditional authorization, such as operational commitments, clauses to maintain capabilities, control over structuring decisions and sanctions in case of breach, golden share, and above all shareholding anchorage and/or presence in governance via a French player (Bpifrance, industrial group) to retain leverage over sensitive assets, business continuity and irreversible decisions.

The bill of March 3, 2026 marks a further step: it tends to transform a practice of governance remedies into a quasi-systematic mechanism, via the veto empowered “proxy board”. If adopted as it stands, it would increase the density of governance obligations and the predictability of State requirements — with a direct impact on documentation (shareholders’ agreements, articles of association), conditions precedent and closing timetable. More than ever, anticipating FDI risk and designing remedies (governance, shareholding, asset organization) are becoming deal parameters that must be factored in from the letter of intent stage.

The movement is also European. With the IAA, the Union would no longer limit itself to coordinating screening (FDI cooperation mechanism) but would seek to “qualify” certain FDI by making them conditional on commitments relating to governance, technology, employment, R&D and sourcing. For transactions affecting the battery/electric vehicle/photovoltaic/critical raw material sectors, the “sovereignty” analysis could thus become two-tiered (national + European), with a concrete impact on structuring (minority stakes, JVs), license agreements, industrial roadmap and conditions precedent.

In the medium term, the announcement of a parliamentary mission and the European dynamic towards convergence of FDI screening and conditionality regimes suggest a more harmonized — but also more demanding — framework, in which investors will have to factor FDI control, now unavoidable in France and across the Union, into the structuring and timetable of their transactions from the outset.

Sources:

Contact:

Olivia Lê Horovitz
Founding Partner of Paris Office
Send Email
+33 (0) 6-20-80-29-63

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