The sale of a controlling 50% stake in Opella, Sanofi's €15 billion consumer healthcare subsidiary responsible for Doliprane, to the US investment fund Clayton, Dubilier & Rice (CD&R) has prompted a strategic response from the French state, and considerable controversy in France. Through Bpifrance, the French state would become a minority shareholder in Opella, holding between 1% and 2%, a mechanism designed to ensure that national interests are respected. According to the French Ministry of the Economy and Industry, this tripartite agreement between Sanofi, CD&R and the French State, signed on October 21, 2024, which has not been made public, would have made it possible to obtain “the highest possible level of guarantees” concerning job protection, production in France, and future investments1 . This intervention, governed by the rules of the French Monetary and Financial Code, illustrates the strengthening of controls on foreign investment in France, particularly in the strategic healthcare sector, but also raises the question of how a tripartite agreement fits in with the procedure for controlling foreign investment (IEF) and the guarantees that can be obtained in the face of fears that a French flagship might be relocated, that know-how might be lost, or that the company might go under the American flag.
The legal framework for foreign investment control
Investments between France and other countries are free. By way of exception, since 1966, investments in a limited number of sectors, notably those related to national defense, those likely to undermine public order and security, and activities essential to safeguarding the country's interests, have been subject to a prior authorization procedure implemented by the Ministry of the Economy.
Firstly, the Montebourg decree in 2014 extended the scope of foreign investment to new economic, social and health sectors to cover critical infrastructure operation activities (energy, water, transport, electronic communications, and public health) subject to authorization. Then, the decree of November 29, 2018 targeted forward-looking technologies, aerospace, and the hosting of certain data followed by Law n°2019-486 of May 22, 2019, known as the Pacte law, which extended control to activities required for the production, processing and distribution of agricultural products and to press activities. Indeed, the decree of December 31, 2019 includes (to take into account the European regulation of March 19, 2019) new sectors such as print and online media, food safety, energy storage and critical technologies (cybersecurity, artificial intelligence, robotics, additive manufacturing, semiconductors, quantum technology, energy storage). The list was extended to biotechnologies by order of April 27, 2020 (in the context of research into an anti-covid vaccine), and completed again by order of September 10, 2021, with the addition of technologies involved in the production of renewable energies. In addition, at the start of the health crisis, and in order to guard against opportunistic non-European shareholdings that could pose a threat to national security, Decree no. 2020-892 of July 22, 20202 lowered the threshold for controlling investments in listed companies from 25% to 10%. Decree no. 2023-1293, dated December 28, 2023, made it permanent to monitor the crossing of the threshold of 10% of voting rights in companies listed on a European regulatory market.
In addition, since Regulation (EU) 2019/452 of the European Parliament and of the Council of March 19, 2019 establishing a framework for screening foreign direct investment (“FDI”) in the Union, adopted in 2019 and entered into force on October 11, 2020, a European mechanism for screening investments from third countries aims to better protect the strategic interests of the European Union. In addition, following the decree of December 28, 2023, since January 1er 2024, operations involving French branches of foreign entities also fall within the scope of control of EFI regulations, as do activities involving the processing and extraction of critical raw materials. Finally, the list of critical technologies has once again been extended to include photonics and low-carbon energy production technologies.
In order to carry out this control, the Ministry of the Economy, to which the Secretary of the Treasury General Directorate (“DGT”) reports, is responsible for examining certain investment transactions involving French entities, in order to determine whether these transactions could undermine public security, public order or France's national defense interests3 . Article L151-3 of the French Monetary and Financial Code stipulates that any authorization granted may be subject to conditions designed to ensure that the planned investment will not undermine national interests4 . Authorizations are therefore generally subject to a number of conditions and commitments on the part of the investor, often relating to maintaining technology and R&D, continuity of production and supply of services or products, and the preservation of jobs in France. However, it should be noted that this control procedure normally only takes place once the offer has been finalized.
The tripartite agreement: a response to the sale of Doliprane
In the case of Opella, Doliprane is a staple product widely used in France. Its sale to a foreign investment fund raised concerns about continuity of supply, maintenance of production in France, maintenance and growth of employment and investment commitments. To mitigate these risks, a tripartite agreement was reached between Sanofi, CD&R and the French state, with BPI taking a stake in Opella. This measure would enable the French government to exercise oversight over the company's strategic decisions, in particular those linked to the production of essential medicines.5 This agreement would also include a certain number of financial penalties in the event of non-compliance with commitments, but which some consider insufficiently dissuasive in view of the value of this acquisition.
The role of the State in protecting strategic sectors
State intervention through the BPI marks a turning point in the way the French authorities approach foreign investment. Control is no longer limited to simply authorizing transactions. It can now include a direct stake in the company, as here with Opella, as well as State participation in the governance of the investor's company. However, it remains to be seen whether such a limited stake will enable the State to influence the company's decisions. The aim is to ensure that products of national importance, such as Doliprane, are not subject to the vagaries of international financial markets, while at the same time guaranteeing security of supply for the population.
A reinforced control model for the future?
The tripartite agreement shows that the State can intervene directly, not only to approve or reject a transaction, but also to become involved in the governance of the company being sold. This paves the way for a model of reinforced control, where the State, via tools such as the BPI, can enter the capital of companies deemed strategic for the economy or national security.
This case could serve as a precedent for other operations in sensitive sectors, underlining the importance of the State in safeguarding economic and social interests in the face of globalization which, while advantageous, entails risks for national sovereignty. However, it is easy to understand the interventionist role of the State, which alone decides whether or not there are risks and how to remedy them, or even imposes its conditions on buyers or dissuades them, as was the case with the refusal of authorization for Photonis, the pre-emptive refusal for the Carrefour- Couche Tard operation, or even more recently, the opposition of the Minister of Industry to the Indian Aurobindo group, which led the Servier group to abandon the sale of its Biogaran subsidiary.
The sale of Doliprane to an American investment fund and the entry of the French state into Opella's capital are indicative of the challenges posed by the globalization of capital in critical sectors. But how can we reconcile the need for financing with health and industrial sovereignty? Why sell to an American fund when the French candidate PAI Partners was backed by Abu Dhabi's Avia, Singapore's GIC and Canada's BCI? Sanofi is said to have justified its decision on market grounds, with the United States accounting for nearly 25% of Opella's sales. Does Doliprane really represent an emblem of national sovereignty when France lacks devices for much more vital products, particularly against cancer? Sanofi seems intent on becoming the world leader in immunology.
Doesn't this almost discretionary power on the part of the State hinder the security of transactions, and even France's attractiveness to foreign investment?
The link between tripartite agreements and IEF control procedures?
It should be emphasized that this agreement is not sufficient, and that the transaction must be submitted for authorization under the IEF control procedure. The Minister for the Economy could, in theory, refuse or authorize the transaction, subject to conditions. However, barring any new difficulties, it would appear politically difficult to refuse or block a transaction that has been the subject of a state agreement. The link between this agreement and the IEF procedure may seem delicate, and run counter to the independent power of the Minister of the Economy.
If CD&R's investment operation were to be approved by Bercy, the authorization could be subject to conditions that would essentially reflect the guarantees obtained by the State in the tripartite agreement. The powers available to the Minister could reinforce the dissuasive nature of the financial penalties provided for in the tripartite agreement in the event of non-compliance with the guarantees. Indeed, in the event of non-compliance with the conditions of the authorization, the Minister can issue injunctions accompanied by penalty payments, withdraw the authorization or impose significant penalties corresponding to double the amount of the investment or 10% of the target's sales.
Why didn't we obtain the same guarantees for the IEF control procedure?
The control procedure for IEFs set out in article L151-3 of the CMF seems broad enough to incorporate most of the guarantees that the tripartite agreement seems to contain.
The question also arises as to the appropriateness of this minority investment by Bpifrance, estimated at between 100 and 150 million euros, in a difficult budgetary context, unless the agreement allows a strategy of increasing Bpifrance's stake in Opella.
The agreement seems to impose stringent conditions in order to preserve industrial capacity and, more rarely, jobs in France. By demanding these commitments at this stage, the French government is demonstrating its determination to guarantee national sovereignty in a strategic sector, which is quite rare in investment negotiations. What's more, the conditions are usually directed at investors, whereas this agreement is also aimed at the target itself, underlining an anticipatory approach on the part of the French authorities to sensitive issues.
The scheme includes obligations to maintain assets, production sites and jobs in France, as well as long-term investment monitoring. This type of condition is reminiscent of the initiatives taken in 2014, when the French government imposed significant financial penalties on General Electric for failing to meet its job creation commitments following the acquisition of Alstom. France therefore aims to ensure that the commitments made are applied in practice, bearing in mind that the effectiveness of such measures depends above all on their implementation, as the European Commission points out in its fourth annual report on screening foreign direct investment in the Union dated October 17, 2024 .6
This agreement, structured around the “Choose France” and “Protect France” principles, could serve as a precedent for future investments, putting forward a framework for protecting national interests without deterring serious investors. The “Doliprane case” shows that an investor capable of anticipating regulatory and political expectations could succeed in investing in sectors deemed strategic, while respecting national imperatives and maintaining France's competitive appeal. It's a question of striking a delicate balance between state interventionism and industrial freedom, protection of national interests (and in this case health sovereignty) and competitiveness in terms of innovation and drug discovery, and more generally protectionism and France's attractiveness.
Footnotes
1. https://www.forbes.fr/business/cession-du-doliprane-letat-sera-actionnaire-dopella-via-bpifrance/
4. https://www.legifrance.gouv.fr/codes/article_lc/LEGIARTI000038589686
6. https://eur-lex.europa.eu/legal-content/FR/TXT/HTML/?uri=CELEX%3A52024DC0464
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